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Westminster City Council takes aim at dirty money in the heart of London

A new charter launched by Westminster City Council and supported by business groups representing London’s biggest retailers, hospitality venues and property owners is being launched today in a fresh bid to tackle London’s international reputation as a money laundering centre.

Dirty Money Charter 2023
Dirty Money Charter 2023 PDF, 6.63 MB, 7 pages

The agreement – the first of its kind in the UK – brings together the council, the New West End Company (NWEC), the Heart of London Business Alliance (HOLBA) and campaign group the Fair Tax Foundation. It intends to shine a fresh light on practices ranging from masking the real overseas owners of properties and businesses to deliberately obscuring company ownership structures.

The council, NWEC and HOLBA cover an area that creates one in ten jobs in London and puts £72bn a year into the UK economy. In addition, Westminster’s eight square miles includes some of the most expensive addresses on Earth and has long been characterised as a haven for oligarch investors.

The charter aims to fight back against the capital’s “London Laundromat” reputation by encouraging organisations to support fair taxation with a series of commitments including:

  • Improving transparency around overseas ownership (where there is no reasonable connection to the country)
  • Being upfront about all ownership structures – understanding as fully as possible who tenants and leaseholders are, encouraging them to be as transparent as possible.
  • Working with the government and the opposition to promote reform of the business rates system – a significant move to ensure shop voids are filled quickly with high quality retailers.

The rise of the US candy store phenomenon on Oxford Street is a vivid illustration of the issues of shop voids, opaque ownership structures and the need for reform of business rates. The rash of candy shops emerged during lockdown and in most cases the traders took advantage of those who simply wanted to fill empty shops to avoid paying business rates. There are currently 29 US candy stores on Oxford Street, the majority of who owe Westminster City Council £9m in unpaid business rates.

Westminster City Council has led the national charge on tackling unscrupulous sweet shop owners through a mix of enforcement and court action. In recent weeks it has recovered £250,000 in unpaid business rates and last month confirmed trading standards had impounded more than £1m in unsafe or illegal goods from the stores in raids stretching back over 15 months.

The council has consistently urged central government to give more support to HMRC and the National Crime Agency to investigate the overseas ownership structures of companies. It also believes Companies House lacks any effective oversight and companies can be set up with virtually no checks on who is behind them – an issue which has hampered effective ownership against the US candy stores in London.

Westminster City Council leader Adam Hug today said the dirty money charter represented a powerful new front in cleaning up London’s name. He said:

It took the war in Ukraine to refocus attention on oligarch investments and what London has become in terms of a European laundromat for dirty money. But the problem goes wider than Russian oligarchs to many others who see Belgravia, Knightsbridge, Mayfair, and the West End as places to rinse their money. This not only damages the reputation of our city by supporting authoritarianism abroad but drains the vitality of areas with empty or under-used homes.

At the same time, Companies House is being played like a fiddle by people who set up opaque shell companies to carry out dodgy transactions and offshore that money as quickly as they can – before even paying their taxes and business rates - as demonstrated so vividly by the rash of candy stores on Oxford Street. This new charter underlines our combined commitment to transparency and openness in business.”

Dee Corsi, chief executive of NWEC, said:

We have a shared ambition with Westminster City Council and our members to stand against illegal activities and tax evasion. We are supporting the Charter’s intention to improve standards and protect the reputation of the West End as one of the leading places in the world for foreign investors to do business. Economic crime has no place in London, and we support Westminster’s ambition in seeking to eliminate it.”

Ros Morgan, chief executive of HOLBA, said:

Our driving mission is to strengthen the West End’s global reputation as a world-class, cultural, and commercial destination. Dirty money has no place in our economy, and we ask the government to support Westminster City Council’s proactive measures to tackle the issues where there is a lack of transparency in property ownership. It is also vital that we create the right environment for legitimate businesses who want to invest in improving the capital, especially at a time when we know that public and private investment could stimulate substantial growth in jobs and productivity.”

Mary Patel, networks manager for the Fair Tax Foundation, said:

Tax dodging and shady company ownership structures distort our economy, damage our high streets and harm local communities. This ground-breaking charter from Westminster demonstrates how united action between local councils and responsible business can directly challenge those who exploit London for corrupt gain. It puts the city on a positive path to being an exemplar of good tax conduct.”

Published: 6 April 2023