After a huge leak of financial data revealed that London is the preferred destination for some of the most powerful and wealthy people in the world, Transparency advocates have called on Britain to strengthen its defenses against money laundering.
This cache contains almost 12 million files and shows how wealthy people all over the globe set up offshore companies in order to purchase property and avoid taxes.
These types of London offshore accounts were used to benefit foreign individuals such as the Jordanian King Abdullah II and Azerbaijan’s President Ilham Aliyev, and others associated with Pakistani Prime Minister Imran Kan. Khan tweeted that Abdullah denied any wrongdoing and that his government would investigate all those mentioned and take the appropriate action if they are found. Aliyev is yet to comment.
The International Consortium of Investigative Journalists published the leaked financial data on Sunday, along with its media partners including the BBC and Guardian newspapers in Britain.
Although the purchases are legal in Britain, they show the complex and sometimes anonymous financial strategies wealthy individuals use to avoid paying tax. This is far from the daily experience of the majority of the British population.
London is the preferred destination for the wealthy and powerful due to its sophisticated ecosystem of businesses that can assist in this process, including high-end lawyers, creative wealth management firms and established accounting firms.
Global Witness, a transparency group, found that 87,000 properties were owned in England and Wales by anonymous tax-haven companies.
It stated that 40% of anonymously owned properties were located in London, and that the property’s total value was likely to exceed 100 billion pounds ($135 trillion). The boroughs of Westminster where the U.K. parliament is located, Camden and Kensington and Chelsea were identified as popular areas.
For years, London’s property market has struggled to overcome its reputation as a key player in how wealthy people hide and enhance their wealth. Many prime properties are owned by non-nationals in the city’s heart. In recent years, Russian oligarchs were prominent purchasers of London property. For decades, the U.K. authorities have encouraged a relaxed approach to regulation to attract foreign capital and talents. Critics claim that this has made it a magnet for tax evasion, which can also be legal.
Duncan Hames is the policy director of Transparency International U.K. and said that the disclosures should be a “wake-up call” for the government, urging it to take long-overdue steps to defend Britain against “dirty money”.
He said that the leaks showed that there was one system for corrupt elites, who have access to prime properties and can enjoy luxurious lifestyles, and another for honest and hardworking people. The same loopholes that were used to funnel suspicious wealth into Britain have once again exposed Britain’s role in global corruption and money laundering.
Transparency International U.K. has asked the government to close the loophole that allows offshore financial centers in the U.K., such as the British Virgin Islands or the Cayman Islands, to own property in the country without having to disclose their true owners.
It calls on the government to take action against professionals who help people with illegal wealth hide or move money to the U.K., and to properly fund the National Crime Agency in order to pursue those accused of making their money through corruption and crime.
Rishi Sunak, Treasury chief, said that Britain’s tax authorities would inspect the Pandora Papers. He also defended the country’s track record in tax avoidance.
Sunak stated that he doesn’t believe it is shameful because of our track record in this area.
He cited the Conservative government’s past decade of transparency measures to increase transparency — who owns it — and to exchange tax data between tax authorities.
He said, “As you can see from the papers it is a worldwide problem, there’s an international dimension to it, and we need other nations to cooperate with us to solve this, but that we are determined to do so.”
Sunak also stated that there was “always more to be done” when asked about reports that half the Russian money laundering takes place in the U.K.
Opposition parties stated that the U.K. Conservative government must act immediately on the revelations.
In a tweet, Lisa Nandy, Labour Party spokesperson for foreign affairs, stated that “the tentacles and dark money exposed #PandoraPapers reach deep into the heart of U.K democracy.”