Today, the government has a unique opportunity to put an end to Britain’s reputation as a haven for kleptocrats and criminals seeking to launder their money. The economic crime and corporate transparency bill, which has been eagerly anticipated, is returning to the House of Commons for a vote on amendments from the Lords that aim to close significant loopholes.
The involvement of the UK and its offshore territories in catering to wealthy foreigners was brought to the forefront during Russia’s invasion of Ukraine in February last year. Sanctions were imposed on those closest to Vladimir Putin and his war machine, many of whom have long used London as a playground, and their known assets were frozen. In response, the government hastily passed the Economic Crime (Transparency and Enforcement) Act 2022, which made it easier to prosecute individuals involved in sanctions busting.
However, a key challenge remains: how do we freeze assets if we don’t know where they are? There are 93,537 properties in England and Wales that are owned by opaque offshore companies, ranging from luxury penthouses in Knightsbridge to mansions in Surrey. Despite the introduction of the Register of Overseas Entities, where beneficial owners must be registered, there are still legal ways to circumvent this requirement. Transparency International released figures in February showing that over 50,000 offshore-held properties still have anonymous owners.
For instance, take Kensington Palace Gardens, one of London’s most expensive streets, located near Prince William’s official residence. One of the neighboring properties, listed in the Land Registry as being owned by “A. Corp Trustees,” does not disclose its beneficial owner with Companies House. Journalists investigating the property have reported that it was owned by the now-sanctioned former owner of Chelsea FC, Roman Abramovich, but there is no official record confirming this.
Similarly, in Lennox Gardens, an exclusive square near Harrods with properties worth £40 million, the Bureau of Investigative Journalism identified two properties owned by overseas companies whose owners have made deliberate efforts to remain hidden. These owners could include sanctioned oligarchs, drug lords, kleptocrats, or simply very private individuals – their true identities remain unknown.
There is hope, however, that the economic crime and corporate transparency bill can address these issues. Lord Agnew, a Conservative peer, has proposed an amendment that would require Companies House to collect and publish information about the beneficial owners of trusts, a legal arrangement often used for ultimate secrecy. The Treasury has currently blocked this move, citing the need for further consultation.
Another amendment, proposed by crossbench peer Lord Vaux, seeks to require nominee shareholders to declare their identities. If passed, this amendment would enable journalists and investigators to unveil the true beneficial owners of UK-registered companies, promoting transparency in property ownership and aiding in the exposure of scammers.
The fight against oligarchs and fraudsters could also benefit from an investigation by the Bureau of Investigative Journalism earlier this year, which uncovered numerous companies involved in a scam known as “pig butchering.” These companies were all registered to a single address in south Croydon, purportedly the headquarters of over 10,000 other firms. The proposed amendment would facilitate the identification of the real owners by journalists and law enforcement agencies.
Cost is another hurdle in tackling high-powered criminals. During debates on the bill, Andy Slaughter MP emphasized that law enforcement agencies often pursue smaller offenders due to the exorbitant costs of litigating against ultra-wealthy individuals and corporations. One proposed amendment suggests capping the costs for law enforcement bodies, enabling more aggressive asset recovery efforts.
These amendments, along with others aimed at combatting economic crime, present a significant opportunity for the government to crack down on illicit funds. Failing to seize this moment could result in the amendments not passing, given the Tory majority in the lower chamber. It is likely that the bill will go back and forth between the two houses before reaching a compromise.
The need to take a tough stance against kleptocrats, dictators, and those evading accountability for their ill-gotten gains goes beyond economic considerations. The democratic world is confronted with serious threats, such as the war in Ukraine, the climate emergency, and the rise of illiberal dictatorships. The UK requires the tax revenue owed to counteract these dangers and restore order. If MPs grasp this opportunity to pass the amendments, it could mark the end of the UK’s complicity in facilitating evasive practices and pave the way for a more transparent financial system.
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