The City of London is known across the world as a financial centre, but sadly, that, and the looseness of UK financial laws, has made it a magnet for tax evaders, money launderers, and those who use our laws to inflict economic misery on other, lower-income countries.
Amongst these people are Russian oligarchs who use the UK, specifically London, as a laundromat for their ill-gotten gains. Indeed, Transparency International research has shown that UK property worth £1.5 billion has been bought since 2016 by Russians accused of corruption or links to the Kremlin.
I therefore welcomed the decision to bring forward legislation to set up a register of overseas entities holding UK property and land and their beneficial owners. Indeed, I believe this was long overdue and I have supported calls for these measures for years.
The Government first promised a register of overseas ownership in 2016 and draft legislation has been in the public domain for this since 2018. It is deeply frustrating that the Government has dragged its feet on stopping dirty money flowing through our economy and that it took Russia’s invasion of Ukraine before it finally acted.
Given how long this legislation had already been delayed, I was concerned at the length of the transitional period in the Bill before any foreign entity needed to apply to join the register. By initially including an 18-month transition period, this legislation offered no immediate deterrent and gave oligarchs a window to escape sanctions; the ‘Oligarch Loophole’. I believe the obligation to register should have come into effect within weeks, not years. That is why I supported amendments that would have tightened the net on Putin’s cronies now by shortening the grace period to 28 days, however, the Government rejected this proposal.
Despite this rejection, some improvements to the Bill were secured. Following pressure, the Government reduced the size of this window to six months when the Bill came before the House of Commons. In the House of Lords, it then further amended the Bill to require overseas entities to declare their beneficial ownership if they sell their property within the transition period, which it said would stop owners avoiding transparency by disposing of assets.
I welcomed these concessions, which improved the final Act significantly and provide a step forward in addressing concerns on this issue. However, I do not believe that they fully resolve these concerns. I can therefore assure you that I will continue to support efforts to press the Government on this issue when a promised further Economic Crime Bill is introduced in the next parliamentary session.
Russian oligarchs aren’t the only villains to take advantage of the City of London and this country’s lax financial laws. We have been a safe haven for the worst financial wrongdoers for too long and I fully support bringing this era to an end.