A joint parliamentary Committee today raised concerns that criminals could exploit loopholes in a new bill aimed at clamping down on laundering money through UK property.
The joint Committee on the draft Registration of Overseas Entities Bill welcomed the legislation, but said in its current state it could be circumvented by criminals.
According to the report £180m of UK property was subject to criminal investigation as the suspected proceeds of corruption between 2014 and 2018.
In 2017 160 properties worth over £4bn were identified as being purchased by high-corruption risk individuals, and 86,000 properties in England and Wales have been identified as owned by companies incorporated in secrecy jurisdiction.
The bill aims to crack down on money laundering by establishing a register of beneficial interests so that owners of property can be identified.
However, the joint Committee of Lords and MPs said it had concerns about the draft bill which could jeopardise its effectiveness.
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The Committee said it was vital that the government introduce the Fifth EU Anti-Money Laundering Directive which covers trusts as these are not included in the draft bill and could be used to circumvent the law.
It said that as the bill exempts entities such as foreign governments from publishing their information, the government must be as transparent as possible and publish an annual statement to parliament of the number of times these exemptions are used.
The Committee also called on the government to ensure that the register was kept up to date and that information on proposed transactions should be entered before they take place in order to capture money laundering at the point it occurs.
Other concerns raised included a lack of verification checks to prevent criminals providing incorrect information and difficulties of enforcement meaning it may be easier to use civil penalties rather than criminal to punish those who infringe the law.
Chairman of the joint Committee on the Draft Registration of Overseas Entities Bill, Lord Edward Faulks QC, said: “We welcome this much-needed legislation as one of the vital tools required to create a hostile environment for money launderers who want to use the UK property market to hide unlawful funds. 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.”
Tom Beak, a lawyer at Kingsley Napley said: "The Bill is undoubtedly a positive step towards lifting the corporate veil and increasing the transparency of ownership in the UK property market.
"Whilst the recommendations strengthen the Bill and provide greater insight into how it would work in practice, the Bill is unlikely to make it impossible to launder money, just much harder.