In the aftermath of the Russian invasion of Ukraine, the UK government promised to clean up dirty money flowing through London. As part of this, new legislation passed last year was supposed to make it harder for kleptocrats to use the UK property market to launder ill-gotten gains.
Introducing the measures, Boris Johnson, then the prime minister, said in March 2022 “what we are bringing forward now is the exposure of the ownership of properties in London, and across the whole of the UK”.
But the legislation that was passed hasn’t achieved this. There is not one, but five, ways in which a foreign kleptocrat can continue to benefit from the ownership of UK land and property without you or I knowing about it.
First, a kleptocrat could just continue to own the property via the foreign company and not bother to register with Companies House. This is definitely against the rules. But at the moment, 6-9% of companies who should have registered appear to be noncompliant. In principle this is a risky strategy but until we see more enforcement action it isn’t clear how risky this is. The register is riddled with spoof directors and shareholders, some of them more obvious than others. Since “Adolf Tooth Fairy Hitler” only recently stepped down as a company secretary listed at Companies House, and “Miser Lord Truman Michael Scr00Ge-Spypriest” is still considered a valid director, he may not be too worried.
Second, if he didn’t want to simply break the rules, he could decide to share ownership of the company equally with his wife and three children. If their shareholdings are all less than 25%, neither he nor they need to be reported as beneficial owners.
Third, if he doesn’t trust his family, he could instead give the property to an offshore trust company, under which he