Pandora papers: Government to introduce offshore register ‘when time allows’

The owners of over 1,500 properties bought in the UK using offshore firms have been revealed – sparking a reiteration from the government that these practices will be made transparent.

Then-Prime Minister David Cameron unveiled plans for a register of foreign companies owning UK property in 2016.

Draft legislation was published two years later and “progress” was promised on changing the law in the 2019 Queen’s Speech.

However the law hasn’t been introduced to Parliament, while it wasn’t listed as a government priority at this year’s Queen’s Speech.

Now the government is saying it will introduce a register of offshore companies owning UK property “when parliamentary time allows”.

UK-based buyers are legally required to be identified via the Land Registry and Companies House, but a loophole means that those wealthy enough to hire lawyers, accountants and corporate providers to create offshore entities can hide their ownership from the public.

Caroline Lucas, Green MP for Brighton Pavilion, responded on Twitter: “Odd how time easily found for trampling on democratic rights but mysteriously not for cracking down on potential money laundering & abuse.”

Notable property owners named

Sir Philip and Tina Green

Sir Philip Green’s wife Tina went on something of a buying spree during the collapse of BHS, the department store chain they owned.

Using anonymous companies based in tax haven the British Virgin Island they bought a £15m apartment in Mayfair and a home for their daughter near Buckingham Palace for £10.6m in 2016.

The demise of BHS led to a loss of 11,000 jobs, while the firm left a black hole of up to £571m in its pension fund.

Gennadiy Bogolyubov 

The Ukrainian billionaire owns over £400m worth of UK property, including a home on Trafalgar Square.

Bogolyubov and his business partner are accused of defrauding the bank they founded, PrivatBank, of more than £1bn.

After being nationalised in 2016 with a $5.5bn black hole in its balance sheet, Bogolyubov is being perused in the courts for $3bn.

His assets are currently subject to a worldwide freeze, secured in court by PrivatBank in 2017.

The US Department of Justice sought to seize commercial properties in Texas, Ohio and Kentucky from the pair in 2020, suspecting that they were “acquired using funds misappropriated from Privatbank”. The court cases are ongoing.

Mikhail Gutseriev

The Russian oligarch’s son owns an office block through an offshore company, purchased for more than £40m.

Gutseriev has close links to Belarus President Alexander Lukashenko, who was sanctioned by the UK and EU last year for violating human rights and democracy.

He founded Safmar Group, a Russian conglomerate in the oil, coal, property and retail industries.

Gutseriev’s son Said, a British citizen, part owns the company.

Pandora papers reveal London’s role in offshore property

John Dobson, chief executive of SmartSearch said: “From sex traffickers to drug smugglers and terrorists, those who launder money through purchasing property include some of the worst criminals on the planet.

“Although sadly not a new issue, the threat of money-laundering through the purchase of property has increased recently. With the pandemic causing transactions to be conducted remotely, the UK government recently raised its own assessment of the money laundering risk for the property market from “medium” to “high”.

“For those working in the property purchase chain, offshore buyers should raise a red flag. While legal to own property through an offshore firm, it is key to identify who is actually providing the funds.

“Finding the Ultimate Beneficial Owner, and then screening them against sanctions lists takes significant time through traditional methods.

“This doesn’t need to be the case. By using an electronic verification system, money-laundering through offshore funds could be dramatically reduced.

“The system will identify who is the beneficiary of the transaction, and even screen them against global sanction lists to identify whether they, or anyone they are close to is involved in illicit activities.

“The government is assessing how to prevent money-laundering through legislation, we’d strongly recommend they mandate the use of electronic verification. As the individual is identified through credit checks, electronic verification not only avoids the issue of forged documents, it also screens them against the hundreds of constantly changing worldwide sanctions lists.”

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