Transparency International has identified at least £1.5bn of UK property owned by Russians accused of financial crime or with links to the Kremlin.
Labour MP Joe Powell has long been a campaigner against corrupt wealth and dirty money flowing through the UK. Elected in July, the MP for Kensington and Bayswater, also founded the Kensington Against Dirty Money campaign that has pushed national and local governments to take action on inequality by reducing corrupt wealth in the borough, going after empty homes, and investing more in social housing.
Around £350bn a year comes through Britain which is dirty money, according to former chair of the Public Accounts Committee Baroness Margaret Hodge, while anti-corruption organisation Transparency International has identified at least £1.5bn of UK property owned by Russians accused of financial crime or with links to the Kremlin.
Such sums have often led to London being described as the ‘dirty money capital of the world’, a destination of choice for economic crime and dirty money.
What can be done about it and how seriously is the government taking the issue? LFF spoke to Joe Powell at Labour conference to find out some of the answers.
Almost 52,000 properties in the UK are still owned anonymously despite a new transparency law designed to reveal their true owners, research from Transparency International UK has found.
Analysis of the Register of Overseas Entities (ROE), a new database of the real owners of offshore firms that hold UK property, shows almost half of the companies required to declare their ownership have failed to do so.
Powell believes the first step any government should undertake is to push for greater transparency so that those engaged in illicit financial flows have nowhere to hide.
He says: “The previous government allowed trust owned properties to still be anonymous, so among the first steps to take would be to include trusts in the property register. In Kensington and Bayswater 40% of foreign owned property is in trusts.”
Powell also believes that there needs to be strategy that runs across government departments focused on tackling illicit financial flows.
“There needs to be greater action to clamp down on some of the loopholes”, says Powell.
“If you own a property through a trust in the British Virgin Islands, for example, you are not required to disclose who the owner of that trust is, that is one major loophole which should be closed.”
He also called for greater support for the National Crime Agency to ensure it has the staff and resources to use the information uncovered to carry out effective enforcement action.
LFF has previously reported on how Kremlin linked Russian donors have made donations to the Tory party. One such donor is Lubov Chernukhin, the wife of a former Putin minister, the largest female donor in British political history, having donated £2 million to the Conservatives from 2012 to 2020.
Does Powell worry about Russian oligarchs using their money to influence UK democracy? “There’s clearly a strategy among some oligarchs who have interests in the UK to get involved in politics using money and influence, for me my focus is political judgement, I wouldn’t take it.”
On the topic of Kremlin linked oligarchs, what about the case of Roman Abramovich? £2.5bn from Roman Abramovich’s sale of Chelsea FC, was supposed to be used for the benefit of victims of the war in Ukraine. Currently the funds are sitting frozen in a bank account.
“There is a lack of transparency over the agreement with Abramovich”, says Powell. “We don’t know exact terms of the sale, but I’m confident Stephen Doughty (Minister for Europe, North America and Overseas Territories) understands the strength of feeling and I’m sure he will do all he can to speed things up.”
The support of the financial services sector is seen as crucial in tackling dirty money, yet is Powell worried that the sector has a culture which could resist the change needed?
“The vast majority of people working in the city do not want to handle dirty money but there are some bad actors and I think lots of times it’s too easy to turn a blind eye so one of the things that we were campaigning for was a failure to prevent money laundering offence.
“So you would put liability onto the companies to ensure they were carrying out due diligence-that would be one of the ways you could do it.”
When corrupt elites from other countries launder and stash their money in the UK, developing and poorer nations suffer most.
Powell says: “I’ve written a letter to NCA about the property empire of a former Bangladeshi minister. These people are taking money out of countries which desperately need it and this is one of the reasons having a transparent property register is so important.
He continued: “If you have foreign government ministers with official salaries in tens of thousands of dollars buying properties worth hundreds of millions of pounds then we need to be able to ask the question about how they’ve been able to do that.
“It’s bad for democracy and development for the country where the money is coming from and its bad for democracy in the UK.”
Basit Mahmood is editor of Left Foot Forward
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