Accessibility links

Booming London Property Market a Haven for Dirty Money

  • Henry Ridgwell

Billions of dollars of so-called "dirty money" from the proceeds of crime, especially from Russia, are being laundered through the London property market, according to anti-corruption activists. The British government has pledged to crack down on the practice.

During the past five years, prime London property has risen in value by 42 percent, and campaigners say it is partly fueled by "dirty" money from the proceeds of crime.

In a recent British television program titled "From Russia With Cash," anti-corruption activist Roman Borisovich posed as a Russian minister looking to buy property with stolen money while visiting several real estate agents in central London. Speaking to VOA via Skype, he described what happened.

“They were all eager to proceed," he said. "Even when I was telling them that the money was meant for the procurement of drugs [medicines] and I stole the money, and obviously sick people were deprived of health care. And they could not care less.”

All the agents suggested buying the properties through offshore companies to offer anonymity to the buyer. One proposed exploiting tax havens in Cyprus and the British dependency of Jersey to set up a so-called "shell company."

“And this particular agent was volunteering to put us in front of a Jersey financiers to put the trust together, and a Cypriot lawyer to put everything else together,” said Borisovich.

Government figures show $191 billion worth of property in Britain is owned by offshore companies. Speaking on a trip Tuesday to Singapore, Prime Minister David Cameron said most were legitimate businesses, but accepted there were problems.

“We need to stop corrupt officials or organized criminals using anonymous shell companies to invest their ill-gotten gains in London property without being tracked down,” he said.

The government has been aware of the laundering allegations for years, says Justin Urquhart Stewart of London-based Seven Investment Management.

“This is dirty money, coming from crime, maybe coming from terrorism, so this needs to be dealt with now,” he said.

Under British law, real estate agents are to report any suspicions that the cash used to buy property has been obtained through criminal means; but, many agents say they should not be expected to detect sophisticated fraud.

XS
SM
MD
LG