UK proposes new laws to tackle corruption in property

UK Prime Minister, David Cameron, has proposed a package of legislative reforms to tackle financial corruption, to help rid London of its status as the 'money laundering capital of the world.’ Under the new rules, which would apply to off-shore owners and also companies competing for government outsourcing contracts, any company wishing to purchase UK property would have to disclose the true owners of the property in a public register, and criminal offences could be filed against executives that fail to prevent fraud or money laundering in their companies.

David Cameron has attempted to regain the initiative on tackling financial corruption by announcing a package of legislative reforms, including a clampdown on offshore companies which have bought as much as £150bn worth of UK property.

The Prime Minister announced the plans in an article for The Guardian today, ahead of hosting an international anti-corruption summit which has taken on added significance since the huge Panama Papers data leak exposed the activities of the rich and powerful in tax havens.

Under the proposed new rules, any company wishing to buy a property in the UK will have to disclose their "true owners in a public register for the first time".

The BBC adds the demand will also apply to any company that is competing for government outsourcing contracts.

This could be a major development in the fight against financial crime. Last July, Donald Toon, the director of economic crime at the National Crime Agency, told the Guardian London had become the "money laundering capital of the world" because of the huge investment in property by opaque companies based in secretive tax havens.

Toon spoke out after data showed that a new tax on properties owned by companies had raised more than £140m in its first three months alone. The Sunday Times reported last August that since 1999, almost 36,000 companies had bought 96,440 UK properties worth around £150bn, of which £112bn related to residential houses.

Criminals investing in UK property through an offshore company would have almost total secrecy and would be able, at a later date, to realise the value of their asset without any links to the original, illegal source of the funds.

Cameron's anti-corruption drive will also see a new criminal offence created that would punish executives for failing to "prevent fraud or money laundering inside their companies". This would be particularly aimed at the chiefs of global banking groups, which have been heavily fined for involvement in corruption in recent years but whose bosses have escaped almost entirely unscathed.

Elsewhere, a number of other countries, including France, Nigeria and the Netherlands, will join the UK in committing to set up public registers of beneficial ownership, with even some UK overseas territories agreeing to join 34 governments in "automatically and regularly" sharing registers of company ownership.

Critics will point out, however, that the British territories of the Cayman Islands and British Virgin Islands, which was the haven most exposed in the Panama Papers leak, have not signed up to any such initiative.

"Cameron has registered his displeasure with the [British Virgin Islands'] refusal to join the automatic exchange initiative by refusing to invite its officials to the summit," notes the Guardian. Some will argue that as prime minister, he can and should go much further to force the issue.