Crackdown on oligarch mansions: Luxury homes that were bought with ‘dirty money’ in London’s wealthiest areas could be seized and turned into affordable housing
- Westminster is reviewing the use of compulsory purchase orders to seize homes
- It has seen a 1,200% increase in registered homes for Russians
- However, the authority faces major obstacles, including a lack of transparency
Mansions of oligarchs bought with ‘dirty money’ in London’s wealthiest neighborhoods could be seized and turned into affordable housing under a new money laundering crackdown.
Westminster City Council is reviewing the use of compulsory purchase orders if it finds properties in areas such as Belgravia, Knightsbridge and Mayfair were acquired with ill-gotten wealth or ‘money of dubious origin’ .
Russians accused of corruption or links to the Kremlin have brought homes worth nearly £430million to Westminster since 2016, according to Transparency International. That’s more than any other council area in Britain.
Meanwhile, Westminster has seen a 300% increase in the number of properties registered to owners in Jersey since 2010 and a 1,200% increase in the number of properties registered to owners in Russia.
Westminster currently has a waiting list for affordable housing of 4,000 households. File photo
The Labour-led council is currently reviewing the use of a compulsory purchase order against a registered property in Seychelles after the owner fell behind on their council tax, the Guardian reported.
However, the authority faces major hurdles, including a lack of transparency over land ownership and a lack of oversight of companies registered at Companies House.
The UK is seen as a ‘global money laundering hub’
Britain has been accused of becoming a ‘global money laundering hub’, with an estimated £1.5billion worth of property in the country bought by alleged Russians corruption or having links with the Kremlin.
Much of the property is held by companies registered in Britain’s Overseas Territories and Crown Dependencies, according to data uncovered by Transparency International, The Times reported in February.
But Transparency International director Duncan Hames warned the figures were just the ‘tip of the iceberg’ and said laws requiring foreign companies with property in the UK to reveal their owners were “long overdue”.
Campaign group Transparency International has also uncovered 2,189 UK-registered businesses that have been linked to 48 money laundering and corruption cases.
At least 28% of corruption-related assets are located in Westminster and are worth almost £430m, a further 20% in Kensington and Chelsea, 10% in Camden and Wokingham in Berkshire, while a further 7% were located in the City of London.
Westminster – which currently has an affordable housing waiting list of 4,000 households – said it was comparing properties held overseas with city tax data to determine whether they were being used for the stated purpose.
The council defines dirty money as that obtained from criminal activities, corruption or the misuse of public funds, while money of questionable origin is generally associated with the use of tax havens or to the elaborate use of front companies.
Council leader Cllr Adam Hug said: ‘Westminster’s dirty secret has been known for many years, but those in power have looked away for too long as money of dubious origin pours into London and investors were taking advantage of our relatively lax laws.”
“It took the war in Ukraine to refocus attention on the investments of the oligarchs and what London has become in terms of Europe’s laundry for dirty money.
“But the problem goes deeper than Putin and his sidekick for many others who see Belgravia, Knightsbridge, Mayfair and other parts of Westminster as places to flush their money.
“This not only damages our city’s reputation for supporting authoritarianism overseas, but drains vitality from areas with empty or underutilized homes.”
Cllr Hug is calling on the government to make a series of changes to help tackle money laundering, including tightening controls on landlords.
‘Companies House does not have the powers or the resources to go after those who set up opaque shell companies to launder and export money from London,’ he said.
“There are more background checks needed to get a loan card from local authorities than to set up a business in the UK.
“We want to work with government ministers and agencies to crack down on dirty money and ensure agencies like HMRC and the National Crime Agency have adequate resources.”
Meanwhile, the authority has seen a 1,200% increase in the number of properties registered with owners in Russia. File photo
His other recommendations include raising the fee for registering a company at Companies House from £12 to £50 and introducing tougher identity checks.
Earlier this year, MailOnline revealed that Westminster had launched a crackdown on the alleged evasion of commercial tariffs by American-style sweets and souvenir shops in Oxford Street.
A total of 30 stores are currently being investigated for fraud on commercial rates of around £8million.
A common feature of these investigations has been the use of opaque shell company structures to avoid identifying the true owners and thus the council’s frustrating attempts to bring offenders to justice.