UK urged to tackle ‘dirty money’ after leaked Pandora papers

London, Oct 5 (BUS) – Britain’s Conservative government is facing calls to toughen the country’s defenses against “dirty money” after a massive leak of outside data showed how London, in particular, is the preferred destination for some of the world’s richest. And the most powerful people to hide their money.

The cache of nearly 12 million files, dubbed “Pandora’s Papers”, was published on Sunday by the International Consortium of Investigative Journalists and its media partners, including Britain’s Guardian newspaper and the BBC.

The UK and London in particular feature prominently in the data dump, with documents showing how wealthy people around the world set up offshore companies to buy property and avoid taxes.

Although the purchases are legal under British law, the latest revelations highlight the complex – and often anonymous – financial practices that wealthy individuals use to avoid taxes, far from the everyday experience of most British residents.

London in particular is a destination for the rich and powerful because it is home to a well-developed ecosystem of companies that can help in the process, including creative wealth management firms, distinguished lawyers and reputable accounting firms.

The London property market has struggled for years to shake off a reputation for playing a central role in how wealthy people around the world seek to hide and highlight their wealth, with many prime properties in the heart of the city owned by non-nationals. Russian oligarchs have been big buyers of property in London in recent years, for example.

London, one of the world’s largest financial centres, has also been prominent in previous financial data leaks, including the 2016 “Panama Papers” and the following year’s “Paradise Papers”.

For decades, authorities in the UK have pushed a light touch approach to regulation in order to attract foreign capital and talent. Critics say this was a magnet for tax evasion, which could be legal, as well as more criminal activities, including money laundering.

Duncan Hammes, policy director at Campaigns International UK, said the disclosures should serve as a “wake-up call” for the government to introduce long-overdue measures to bolster Britain’s defenses against tax evasion and money laundering.

“These leaks show that there is one system for corrupt elites who can buy access to prime real estate and enjoy luxurious lifestyles and another system for hard-working people,” he said.

He added: “Once again, Britain’s role as a catalyst for global corruption and money laundering has been exposed with the same loopholes that have been exploited to transfer suspicious wealth to the country.”

Transparency International UK is urging the government to close a loophole that allows companies in UK offshore financial centers such as the British Virgin Islands and the Cayman Islands to own property in the country without requiring these companies to reveal the names of their true owners.

The government also wants to crack down on professionals who help those with illicit wealth move and hide their money in the UK and to provide the National Crime Agency with adequate resources to go after those suspected of making their money through crime and corruption.

Chancellor of the Exchequer Rishi Sunak said British tax authorities would examine the Pandora Papers. He defended the country’s record on tackling tax evasion.

“I don’t think it’s a shame because our record in this case is very strong,” Sunak told BBC Radio.

He noted the measures the Conservative government has taken over the past decade to improve transparency – who owns what – and the sharing of data between tax authorities.

He added, “As you have seen from the papers, it is a global problem, there is a global dimension to it and we need other countries to cooperate with us to address this, but we are determined to do so.”

Sunak also said there is “always more we can do” when asked about reports that half of Russian money laundering is estimated to take place in the UK.

Opposition parties said the disclosure, which also raised questions about donations to the Conservative Party, must be urgently acted upon by the government.

“The tentacles of black money exposed by the Pandora Papers are reaching the heart of democracy in the UK,” Labor foreign affairs spokeswoman Lisa Nandy said on Twitter.

RAE