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Monday, August 01, 2022

UK Government still struggling to contain oligarchs

Thanks to lax controls on capital the UK has long been the money laundering capital of the world, unfortunately that is not likely to end soon, despite new legislation coming into force this week.

The Guardian reports that claims by the business secretary, Kwasi Kwarteng, that the new legislation will have an “immediate dissuasive effect on oligarchs attempting to hide their ill-gotten gains, ensuring that the UK is a place for legitimate business only”, have been met by secpticism by others.

They say that a string of lawyers, tax experts, MPs, accountants and transparency campaigners are warning that the long-awaited register of overseas entities, which was sped through parliament after Russia’s invasion of Ukraine, is “riddled with flaws and loopholes” and will have no impact on forcing corrupt oligarchs to reveal which UK mansions they own:

The register is intended to, in the government’s words, “flush out corrupt elites laundering money through UK property” by forcing secretive overseas companies to reveal the true owner or risk “tough fines”, or even up to five years in prison.

The Labour MP Margaret Hodge, who has long campaigned for a crackdown on secretive overseas ownership of UK property, complained that the register was “more lead balloon” than the “silver bullet we were promised would stop abuses like money laundering in our real estate sector”.

She said: “The new register is riddled with flaws and loopholes that mean oligarchs and organised criminals will still be able to evade scrutiny and secretly purchase premium London property, such as Highgate mansions or Kensington townhouses.

“To truly stop the flows of corrupt wealth into our housing market, the government must urgently put in place an open register of the true owners of UK land and property, not just of those owned by companies. Anything less would demonstrate once and for all that this government is truly soft on dirty money.”

John Cullinane, the director of public policy at the Chartered Institute of Taxation, the leading body representing tax accountants, said oligarchs and other members of the corrupt elite would be easily able to exploit “gaping holes” in the new rules.

He said individuals could legally sidestep the rules by holding property or land in the name of a nominee company, or by simply sharing the ownership with more than four relatives or friends.

“We highlighted a particular loophole in the new law, namely that the legislation requires the identification only of the beneficial owners of the company in question, and not those of the land or property itself. This matters because the company could be holding that land as a nominee for an individual who does not own the company,” Cullinane said.

“The company might be owned by a Cayman or Panamanian law firm, for example, which holds legal ownership of many properties on behalf of wealthy clients. In this scenario the names on the register would likely be the partners in the law firm, or perhaps no one at all. The name of the oligarch would be nowhere to be found.”

Cullinane said that even if an oligarch did own shares in an offshore company that owns a UK property, “if they hold 25% or less of that company’s shares, nothing needs to be disclosed.” He said: “A family of six could each own a 16.67% share of the company, thus bringing them outside the registration requirements.”

He pointed out that Alisher Usmanov, who has been subjected to UK sanctions and described by the government as “one of Vladmir Putin’s favourite oligarchs”, has said he has transferred properties into irrevocable trusts in the names of members of his family, potentially putting them beyond sanctions.

Cullinane also said a fine of up to £2,500 a day for failing to comply with the rules was unlikely to pose much of a deterrent to the super-rich targets of the legislation.

The new law is a start, but it needs to go much further.

Yes the law is a start.A long way to go.Remember the Conservative love -in with oligarchs helps fund their campaigns.They will fight draconian efforts to stop the funds, that is why a lot of pressure has to be maintained on tougher laws.
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