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Westminster launches war on dirty money

Westminster will become the first local authority in the UK to launch a “dirty money” campaign in a bid to combat the capital’s reputation as the European centre for money laundering.  

The council will tonight (Wednesday) take the first step by passing a motion that approves signing the Fair Tax Pledge - aligning itself with major companies and public sector organisations in the UK committed to ensuring transparency in tax - and committing itself to work with others to tackle the scourge of economic crime and international corruption in the Westminster property market.   

In an unprecedented move for Westminster, Leader Adam Hug is also convening a landmark meeting of major property owners, experts and officials in the capital to join the City in a new “Westminster against dirty money” campaign.  

Cllr Hug is calling on central Government to make major changes in order to stop London being a soft touch for investors with dubious money to spend. 

These include: 

  • Tightening UK procurement laws to restrict the artificial use of tax havens and low-tax jurisdictions
  • A commitment in the forthcoming Economic Crime Bill to a proper level of resourcing for the National Crime Agency and HMRC to fight money laundering, together with tougher penalties for failing to comply with money laundering supervision requirements
  • Increasing the fee to register a company at Companies House from £12 to £50 and introducing more rigorous identity checks
  • Properly implementing the newly passed but long delayed beneficial ownership register of property to deliver transparency about ownership

Westminster City Council will tonight vote to adopt a raft of new fair tax measures. The authority will pledge to ensure the fair payment of taxes, business rates and employment taxes through robust implementation of IR35; not use offshore vehicles for land or property purchase and check to ensure suppliers are not inappropriately utilising not-for-profit structures to avoid tax.

Westminster has seen a 300 per cent rise in the number of properties registered to owners in Jersey since 2010 and a rise of 1,200 per cent in the number of properties registered to owners in Russia. While Westminster is home to a cosmopolitan population, the explosion in investment underlines fears that property is being used to launder money of questionable origin.

Cllr Adam Hug said:

Westminster’s dirty secret has been known for many years but those in power looked the other way for too long as money of questionable origin flooded into London and investors took advantage of our relatively lax laws.

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 Putin and his henchman to many others who see Belgravia, Knightsbridge, Mayfair and other parts of Westminster 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.

Companies House does not have the powers or resources to address those who set up opaque shell companies to launder and export money from London. There are more background checks required to get a local authority lending card then to set up a company 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 are properly resourced.

The council’s campaign will take its next step on Thursday September 22 with an open forum including major property developers from the capital’s property industry, leading anti-corruption experts and representatives from key government agencies.

Earlier this year, Westminster City Council made international headlines by exposing the extent of business rates evasion by some US-style candy stores and souvenir shops operating on Oxford Street. A total of 30 stores are currently under investigation for business rates evasion of around £8m. A common feature in these investigations has been the use of opaque shell company structures to avoid identifying the genuine owners and so frustrating attempts by the council to take offenders to court.

Published: 21 September 2022