Plans to crack down on oligarchs using Belgravia, Knightsbridge, and Mayfair “to rinse their money” call for seizing and turning homes bought with “dirty money” in the wealthiest areas of London into affordable housing.
Labour-controlled To “combat the capital’s reputation as the European centre for money laundering,” Westminster City Council is looking into the use of compulsory purchase orders in exceptional circumstances if it discovers that properties are not being utilised for their declared purpose.
The strategy faces challenges due to a lack of property ownership clarity and insufficient oversight of company registration. Still, the council has threatened to use confiscated properties to assist cut the 4,000-household waiting list for affordable housing.
Since 2010, the number of homes in Westminster registered to owners from Jersey and Russia has increased by 300% and 1,200%, respectively.
The council is considering using a compulsory purchase order against a Seychelles-registered property whose owner has significant council tax arrears.
According to Transparency International UK researchers, Russians accused of corruption or links to the Kremlin have purchased property worth approximately £430 million in Westminster since 2016, more than in any other UK area (TIUK).
Property worth approximately £283 million are thought to have been purchased in neighbouring Kensington and Chelsea.
Adam Hug has been the leader of Westminster Council since May, when Labour regained control following 58 years of the Conservative government.
He said: “Westminster’s dirty secret has been known for many years, but those in power looked the other way for too long as money of questionable origin flooded into London and investors took advantage of our relatively lax laws.
“It took the war in Ukraine to refocus attention on oligarch investments and what London has become in terms of a European laundromat for dirty money.”
He said the problem went further than “[Vladimir] Putin and his henchmen” and that it damages London’s reputation by supporting authoritarianism abroad. Hug added that it “drains the vitality of areas with empty or underused homes”.
London Council Is Mapping Properties Owned Overseas Against Council Tax Data
London council is mapping overseas properties against council tax data to see if they are being utilised for their claimed purpose. Westminster intends to target residences purchased with “dirty money” or “money of doubtful provenance.” According to the council, dirty money is earned by criminal conduct such as bribery, government funds theft, and public office abuse.
Money of dubious origin is money that has no or limited openness about how it was obtained. It is sometimes related to using tax havens or complicated business structures to evade tax.
Rose Zussman, policy manager at TIUK, said: “It is no secret that kleptocrats and those with money to hide have invested vast sums into the Westminster property market over the years. It is promising to see the council seeking to help expose and recover these illicit assets.”
However, she stated that any reclaimed cash linked to corruption should be returned to victims in the original state “to ensure justice is served.”
Hug is also convening a meeting in the capital of property owners, experts, and officials to join the “Westminster against dirty money” campaign and is urging the government to limit the artificial use of tax havens and increase funding for the National Crime Agency and HMRC to combat money laundering.
The council wants the new beneficial property ownership record to be implemented entirely and more vigorous identity checks when people register businesses. The register went live last month. By the end of January 2023, international organisations that already own or rent land or property in the UK must submit the names of their registrable beneficial owners or managing officials.
