The Mayor of London has called for a register of overseas property ownership in a bid to crack down on money laundering as threats of Russian sanctions intensify.
Sadiq Khan said a lack of transparency around property ownership in Britain was enabling allies of Russian President Vladimir Putin to shelter billions of pounds worth of undeclared sums in the capital and across the country.
The government planned to have a register operational by 2021. But five years after work on the proposals commenced, Khan said there was still no meaningful legislation in place.
“The slow pace of progress on this issue has been bitterly disappointing – and it will prevent the government acting on their tough talk about further sanctions if they are imposed on Putin’s regime,” Khan said.
The mayor noted that the opaqueness of the current system could be aiding offences such as tax evasion and money laundering, as well as hiding the assets of those targeted by economic sanctions.
It comes as the U.K. government threatens tough sanctions if Russia invades Ukraine, with Foreign Secretary Liz Truss warning that oligarchs with links to the Kremlin would have “nowhere to hide.”
Yet a recent report by cross-party members of parliament found that the U.K.’s law enforcement regime is not “up to the job” of preventing fraud and money laundering seeping into its financial system.
Swelling foreign property ownership
The amount of illicit and undeclared money invested in Britain is notoriously hard to track.
Khan said that while the government was aware of some properties owned by Putin’s allies, the current system means it’s unclear who owns thousands of others. A register would make it easier to trace the owners of properties, which can often be held discretely through holding companies.
“For far too long ministers have turned a blind eye to the use of our capital city as a safe harbor for corrupt funds, which is having a negative impact on both our international reputation for transparency and our local housing market,” Khan said.
Currently nearly 250,000 properties in England and Wales are registered with overseas-based buyers — up from fewer than 88,000 in 2010 — with London accounting for almost one-third.
Many such properties are left vacant at a time when Britons are struggling to get on the property ladder amid rising property prices and unaffordable rents.
“The truth is that property in London plays a central role in harboring illicit funds from around the world, which also results in many properties being left empty and unused at a time when many Londoners are struggling to afford a home to buy or rent,” Khan added.