March 4, 2015 / 12:08 AM / 5 years ago

Corruption watchdog urges UK to curb hot-money flows into property

LONDON (Reuters) - Nearly 200 million pounds ($307 million) of money believed to be the proceeds of foreign corruption has been spent on British properties since 2004 and that amount is probably just the tip of the iceberg, a campaign group said.

A woman sits on her balcony (TOP RIGHT) in a tower block in west London in this file photo taken on January 22, 2009. REUTERS/Toby Melville

Transparency International urged Britain to toughen its money-laundering rules by requiring information on the ownership of holding companies in offshore tax havens if they are used to buy residential or commercial property.

“There is growing evidence that the UK property market has become a safe haven for corrupt capital stolen from around the world, facilitated by the laws which allow UK property to be owned by secret offshore companies,” said Robert Barrington, executive director of Transparency International UK.

British police investigated the purchases of properties worth more than 180 million pounds over the past 10 years because they suspected the money was the proceeds of corruption, the anti-corruption watchdog said.

Seventy-five percent of those purchases involved offshore secrecy to hide the identity of the buyers, it said.

Transparency International said the true scale of the problem was likely be much larger, since the United Nations estimates only 1 percent of laundered money is ever detected.

Over 36,000 properties in London — where prices have soared in recent years — are held by companies in offshore tax havens, 38 percent of them in British Virgin Islands, it said.

Almost one in 10 properties in the central London borough of Westminster and 7.3 percent of properties in Kensington & Chelsea were owned by companies registered in an offshore secrecy jurisdiction, it said.

British Prime Minister David Cameron has sought to lead a global crackdown on money laundering and tax evasion. His government has proposed new laws to require a public register of the true ownership of UK-registered companies, but that requirement does not extend to offshore companies.

A spokesman for Britain’s Department for Business said the government was committed to tackling illicit financial flows and the misuse of companies and it was trying to encourage countries outside the European Union, such as overseas tax havens, to change their rules, too.

Writing by William Schomberg; Editing by Larry King

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