Labour-controlled Westminster City Council is considering the use of compulsory purchase orders in extreme cases where it finds properties are not being used for their stated purpose, as part of a push to “combat the capital’s reputation as Europe’s center for laundering of money”. The plan faces hurdles such as a lack of transparency about property ownership and a lack of checks on company registration, but the council is threatening to use foreclosed homes to help reduce the affordable housing waiting list of 4,000 households. The number of properties in Westminster registered with owners in Jersey and Russia has increased by 300% and 1,200% respectively since 2010. The council is investigating the use of a compulsory purchase order against a Seychelles-registered property whose owner has paid significant tax arrears. Russians accused of corruption or links to the Kremlin have bought almost £430 million worth of property in Westminster since 2016 – more than in any other area of the UK – according to Transparency International UK (TIUK) researchers. Property worth around £283million is believed to have been bought in neighboring Kensington and Chelsea. Adam Hagg has been leader of Westminster council since May, when Labor took control for the first time after 58 years of Conservative rule. He said: “Westminster’s dirty secret has been known for many years, but those in power have 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 oligarchic investment and what London has become in terms of Europe’s laundromat.” He said the problem went further than “[Vladimir] Putin and his cronies’, and that he is damaging London’s reputation by supporting authoritarianism abroad. Hug added that it “drains the vitality of areas with vacant or underutilized houses.” The council maps overseas-owned properties against council tax data to determine whether they are being used for their stated purpose. Westminster plans to target homes it discovers have been bought with “dirty money” or “money of dubious origin”. The council defines dirty money as that obtained through criminal activity, including bribery, theft of government funds and abuse of public office. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Money of questionable origin is money where there is no or limited transparency about how the funds were obtained, often linked to the use of tax havens or elaborate corporate structures to avoid taxes. Rose Zussman, director of policy at TIUK, said: “It’s no secret that kleptocrats and those with money to hide have invested huge sums in the Westminster property market over the years. It is promising to see the council trying to help uncover and recover these illicit assets.” But he said any funds recovered linked to corruption should be returned to victims in the state of origin “to ensure justice is served”. Hug is also convening a meeting of property owners, experts and officials in the capital to join the ‘Westminster Against Dirty Money’ campaign and is calling on the Government to clamp down on the artificial use of tax havens and increase funding for the National Crime Agency and HMRC to the fight against money laundering. The council wants stronger identity checks when people register companies and for the new real property ownership register to be fully implemented. The register went live last month and overseas entities that already own or lease land or property in the UK must submit their registered beneficial owners or directors by 31 January 2023.
