Transparency International urges Britain to rein in hot-money flows into property

Nearly £200 million (HK$2.38 billion) believed to be the proceeds of foreign corruption has been spent on British properties since 2004 and that amount is probably just the tip of the iceberg, a campaign group said.

Transparency International urged Britain to toughen its money-laundering rules by requiring information on the ownership of holding companies in offshore tax havens if they are used to buy residential or commercial property.

"There is growing evidence that the UK property market has become a safe haven for corrupt capital stolen from around the world, facilitated by the laws which allow UK property to be owned by secret offshore companies," said Robert Barrington, executive director of Transparency International UK.

British police investigated the purchases of properties worth more than £180 million over the past 10 years because they suspected the money was the proceeds of corruption, the anti-corruption watchdog said.

Seventy-five per cent of those purchases involved offshore secrecy to hide the identity of the buyers, it said.

Transparency International said the true scale of the problem was likely much larger, since the United Nations estimates only 1 per cent of laundered money is ever detected.

Over 36,000 properties in London are held by companies in offshore tax havens, 38 per cent of them in the British Virgin Islands, it said.

Almost one in 10 properties in the central London borough of Westminster and 7.3 per cent of properties in Kensington and Chelsea were owned by companies registered in an offshore secrecy jurisdiction, it said.

The British government has proposed new laws to require a public register of the true ownership of companies registered in Britain, but it does not extend to offshore companies.