Can we stop crooks laundering money in London?

The London property market is perhaps the single most favoured destination for kleptocrats to stash the money that they’ve stolen. Whole chunks of our capital city have become a scaled-up, multi-billion-pound version of the Kingsland Road electronics shops that specialise in selling iphones nicked from tourists in the West End. But at least police officers can keep an eye on these shops and, by watching who is going in and out, make a direct connection between the thief and his fence. The offshore holding companies, however, obscure what’s happening, and make law enforcement’s task far harder. Where ordinary crimes have just two phases – steal, then spend – kleptocracy gains an extra one. Before the kleptocrat spends the money he has stolen, he obscures his ownership of it: steal, hide, spend.

He steals a fortune in the country he rules, hides it offshore, then spends it in London. Perhaps as much as a trillion dollars are stolen every year from the world’s poorest countries in this way – money that could be spent on medicines, roads, education or security, but is instead going into high-end property, luxury goods and lawyers’ fees.

The world has a truly parlous record of tracking down this stolen wealth, confiscating it and returning it to its true owners. Kleptocrats can retain top-end lawyers, and fight through the courts in every jurisdiction they’ve use to obscure their fortune. Former Ukrainian prime minister Pavlo Lazarenko was arrested in the United States back in 1999, tried and jailed for corruption, and yet – almost two decades on – his assets are still out there hiding in the well-protected country of the mega-rich that I call ‘Moneyland’. If even the US authorities struggle to extract stolen assets from behind Moneyland’s offshore ramparts, it’s not surprising less-resourced countries can’t either.

For every $1,000 stolen each year, and stashed offshore, perhaps as little as 25 cents is ever confiscated. That means that, thanks to the offshore structures available in Moneyland, grand corruption is basically a one-way bet for the clever kleptocrat.

The damage that the looting of the world is doing to the structure of civilisation is obvious. The Nigerian and Ukrainian states are so enfeebled by corruption they have lost control of whole provinces. The Kremlin elite has mastered offshore skulduggery in its aggressive efforts to steal fortunes, and to prevent the rest of the world uniting against it. Insiders in the Venezuelan regime have made billions from the black market in their own currency, stashing the proceeding in Miami real estate, while ordinary people are struggling to buy food or medicine.

If you are a believer in the values that Western civilisation claims to be based on, then there is no upside to the secrecy available offshore for those willing to pay for it. So why do I think it should be available for free?

The problem is that there are and will always be people with a legitimate need for anonymity. Back in 2016, the Panama Papers leak revealed that Emma Watson – the actress who played Hermione Granger in the Harry Potter films – had used a BVI company to own London property. Her reasons for doing so were entirely understandable: she has been plagued by stalkers and didn’t want her name and address available on the Land Registry. There are thousands of others out there like her, who would be placed at risk if their names were revealed.

Under my proposal, these people would be able to essentially go ex-directory, to make sure their address was a secret between them and the Land Registry, and only available beyond that to people with a good reason for knowing it. Right now, only those who can afford it can access anonymity, but it should also be available to anyone at risk.

Once we have established a system where those with a legitimate right to anonymity can secure it, we can strip away everything else. Under the current system, kleptocrats can keep their property ownership secret not just from the public but also from the authorities; this must end. As soon as crooks and thieves are no longer able to conceal their ownership offshore, they’ll be reduced to the status of thieves trying to flog iphones in Hackney, the link between their crime and their expenditure will be obvious and overt, making their prosecution far more straightforward.

If Britain truly wishes to drive dirty money out of its economy, it needs a whole new approach to ownership information, where transparency is the default option. This simple reform would prevent the looting of some of the most vulnerable places in the world, and do more long-term good than our aid budget.