By Chris Blackhurst From London Evening Standard

For years now, we’ve known that the UK property market, and that of London, in particular, has been flooded with dirty money from abroad.

Suddenly, the Prime Minister makes a speech warning “the UK must not become a safe haven for corrupt money from overseas” and he’s lauded for his tough new stance.

Long overdue, say those who’ve witnessed the capital turn into a prime destination for dodgy politicians, fraudsters, drug dealers and other crooks anxious to wash their ill-gotten gains.

Transparency International reckons there are 36,000 properties in London owned by foreign shell companies.

It’s so easy as to be laughable. Indeed, in some quarters internationally, that’s how buying an apartment off-plan in London via a company registered in Cayman, Panama or some such place specialising in helping people keep their cash away from prying eyes, is portrayed.

One Middle Eastern businessman, who does not own any property in the West, said: “It should be self-evident that London is the world centre for washing money, because there is no logical reason for any normal person to pay those crazy prices.

“What other reason could there be? Not only is it the easiest place on Earth to launder money, but you get bragging rights thrown in as a bonus.”

At least, finally, David Cameron is doing something about it. But is he really? Publishing a list of all the land in England and Wales owned by foreign companies will be just that: a roll call of names that on their face are meaningless and often innocuous (launderers love to give their vehicles the most ordinary titles so as not to draw attention to themselves).

Publication this autumn will lead to further protest — the public will be shocked by just how much of our green and pleasant land has been snapped up — but it’s only if enforceable regulations are introduced requiring disclosure of the owners of these shell companies that anything will actually change.

From next year, promises Cameron, British companies will be obliged to declare the identity of their owners.

That’s not enough: it’s the foreign companies buying British property that should be the real target.

Going to the haven direct and appealing to their better nature to help will achieve zilch. These are locations that don’t do better nature. Their entire economic model is predicated on total secrecy. Make a concession to the UK and they might as well shut up shop.

It is not going to happen.

Another ploy might be to say to foreign companies bidding for a British government contract that they must state publicly who owns them. That may persuade some to come clean, but relative to the numbers we’re talking about it won’t make much difference.

No, the only measure that will have a major impact is to change the UK law, to force estate agents to reveal their client’s true identity.

In financial services, it’s standard operating procedure: before any bank, accountant, lawyer or financial counterparty will even agree to do business with any legal entity anywhere in the world, be it the UK, Cayman, Switzerland or Saudi Arabia, they have to go through “client onboarding”.

This has three stages: evidence of identification or KYC, know your customer; credit approval; and legal formalities.

In KYC, the chain of ownership must be traced all the way up to the top company and all beneficial owners of that top company have to be disclosed and identified.

This means: furnishing proof of ID, with a passport with a clear photo; supplying proof of address from a utility bill; disclosing the origin of the funds by identifying the sending bank; and establishing the origin of the wealth, whether it’s from dividends, inheritance, bonus and so on.

IMAGES:
House rules: David Cameron warns that Britain must not be a safe haven for corrupt cash (Picture: AFP/Getty Images)
Cayman Islands Places like the Cayman Islands have economic models built on secrecy (Picture: Getty Images)

For more on this story and video go to: http://www.standard.co.uk/business/markets/chris-blackhurst-how-to-keep-dirty-money-out-of-property-in-the-uk-10423436.html

See iNews Cayman related story published July 28 2015 “Britain’s Cameron warns of dirty money in London property” at: http://www.ieyenews.com/wordpress/britains-cameron-warns-of-dirty-money-in-london-property/