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Ministers must close ‘loopholes’ in new property legislation aimed at money launderers, report says

Government plans to crack down on foreign criminals laundering money through the UK’s property market are at risk unless steps are taken to close potential loopholes.

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Picture: Getty
Picture: Getty
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Ministers must close ‘loopholes’ in new property legislation aimed at money launderers, report says #ukhousing

The warning came in a report from a joint committee of MPs and peers in charge of scrutinising the draft legislation, which sets out the laws needed to establish a register to track foreign property purchasers.

Between 2004 and 2015, £180m of UK property was subject to criminal investigation as suspected proceeds of corruption, and that may be just the tip of the iceberg, the committee said.

In 2017, 160 properties worth over £4bn were identified as being purchased by so-called “high corruption risk individuals”, and 86,000 properties in England and Wales have been identified as being owned by companies incorporated in secrecy jurisdictions.

But the committee suggested that the aim to create a “hostile environment” for money launderers was at risk to due to a lack of “teeth”, and that the legislation contained insufficient verification checks to deter criminals from submitting false information.

It also flagged concerns that the bill does not cover trusts, and that the government needed to make clear which entities might be exempted and publish any that are.

It suggested that property vendors should be required to update their ownership information every year and also update information about proposed transactions before they take place – capturing information at the point where most money laundering occurs.

“The committee’s witnesses suggested that a lack of information about anonymous owners often stands in the way of criminal investigations,” the report said.

The joint committee expressed concerns that enforcing the new law would be difficult.

Lord Edward Faulks, chair of the joint committee, said: “The legislation is well drafted, but there are still some loopholes in the draft bill which, if unaddressed, could jeopardise the effectiveness of this important piece of legislation.

“In the current political climate, anti-money laundering may not seem an immediate priority. But the evidence we took shows there’s a huge problem and it’s not going away. Time is of the essence – the government must get on with improving this bill and making it law.”

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