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the british government is talking tough
since the war began in ukraine it's
imposed strong sanctions on russia
as well as individuals with kremlin
connections
oligarchs in london will have nowhere to
hide
london is a wash with russian money
these are homes valued at tens of
millions of pounds
so much so it's even earned a nickname
londongrad
the oligarchs have come to london bought
luxury properties in some cases bought
football clubs there was so much money
coming in from that part of the world
and it's not just russians billionaires
from around the globe and their money
love to call london home
this is wealth beyond anybody's
imagination the trouble is it's not all
clean
britain is one of the best places in the
world to launder dirty money
why does it make it so easy
fasten your seat belts and put yourself
in the hands of a magician
world-class shopping
high society it may seem natural that
the super rich would want to live in the
british capital but the rise of
londongrad wasn't a happy accident it
was a business model this is a story
that goes back to
just after the second world war in the
1950s britain was really trying to deal
with a loss of empire and looking for a
new role in the world
in 1956 the suez canal crisis led to
massive sell-offs of sterling around the
world
in response the bank of england
encouraged a radical new kind of market
british banks started to borrow not buy
american dollars to do deals
because they were trading in u.s
currency this avoided bank of england
regulations
but because they hadn't actually bought
the dollars it avoided american ones too
and that led to the development of
what's called the euro markets which
essentially means trading
currencies of different types outside of
their home countries
britain had taken offshore banking
mainstream
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the development of offshore banking was
was a big turning point because banks
generally don't like regulation and what
offshore allowed you to do essentially
was to
to use jurisdictions that had lighter
regulation and just allowed more freedom
when it came to moving capital around
the world
and storing it
british banking had changed forever
and by the swinging 60s business was
booming
london had become the place to skirt
banking regulations
and at the same time you had a whole
bunch of
offshore territories of the united
kingdom they were actually encouraged by
britain to develop into corporate
services and finance
from the british virgin islands to
jersey by the 1980s britain had a web of
overseas territories and crown
dependencies that were helping clients
to hide their cash
and no one seemed to mind where the
money was coming from grand cayman's
modern claim to fame is as an offshore
tax and banking haven
then in 1991 the game really changed
when the ussr fell ex-soviet
nationalized industries were sold off at
a fraction of their true value
a few canny businessmen got very rich
very quickly
britain saw an opportunity
it goes back to john major and the 1990s
the major government introduced golden
visas essentially if you were a wealthy
foreigner and you wanted
residency in the uk even if you didn't
intend to spend all of your time there
you could to pay a large investment to
win that right
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even at the time the scheme had its
critics it seems quite astonishing to me
anybody who's laundered money or simply
to buy a a ticket to
to britain but the bait worked
investing a million or two was a small
price to pay for a billionaire
russia's super rich flocked to make
london their second home
londongrad was born
a lot of the money that comes here is
perfectly legal but tens of billions of
pounds of it isn't
so how does britain help to hide dirty
money
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if i was an oligarch and i was looking
to uh
launder money
i'd probably hire a team i'd hire a
wealth manager and they would
suggest various structures into which i
could place my wealth you would
basically come up with a with a system
that would diversify your your money and
make it
virtually impossible for investigators
to to track that money
if money can't be tracked no one can
prove where it came from
or see who owns it now
that's where shell companies come in
if one of those owns the money it
doesn't leave any fingerprints
and setting one up in britain is easy
you can register a company for as little
as 12 pounds in the uk and then use that
company to hold a bank account in in
latvia or switzerland
registering a company at london's
company's house takes just 24 hours
there are very few checks over a
person's identity when you register a
company that is changing as we speak and
there are
supposedly verification procedures being
brought in but up until now
anybody could uh register a company you
didn't need to produce a passport or any
personal identification you can register
it online from from overseas you don't
even have to be the owner of the of the
company
according to the world bank britain is
one of the easiest places anywhere to
create a company
is the uk the best place to set up a
shell company certainly would put the uk
in the top five let's say
including the overseas territories
because it's just so easy to register a
company here
and in one part of the uk it's even
simpler
scottish limited partnerships are a type
of company that is only available in
scotland and they have fewer reporting
requirements than the rest of the uk you
don't have to file accounts for example
if turnover is under a certain amount
you can actually say that the company's
involved in business
but you can provide no record of what
that business actually entails
but on closer inspection wealth hidden
in a shell company still looks like
wealth
putting money into property is a great
way of disguising it and keeping it safe
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excuse me for a second
interesting
that's an iceberg
it goes down as far as it goes up
and it's there wrapping up building at
this stage
arthur dewan's activist group clamp k
runs kleptocrat tours of london
showing people mega mansions bought with
dirty money
number 14 walton street which is over
here just behind these olive trees was
the subject of the first unexplained
wealth order that was brought to court
by the nca it's completely unfair that
the ordinary british citizen voter
taxpayer has to compete for a british
house with this foreign stolen money
we know there are thousands of
properties in this part of london
that are owned through these kind of
shell companies
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here's how that can work
a house can be bought through an
offshore bank account
that bank account can be in the name of
an offshore shell company
that shell company could be owned by a
trust somewhere else
suddenly the house with all that money
in doesn't look like anything at all
it's a great trick for hiding dirty
money
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russians who have been accused of
corruption or of having links to the
kremlin have bought at least 1.5 billion
pounds worth of property in britain and
they're not the only kleptocrats in town
at the same time real estate prices in
the capital have risen to eye-watering
levels
prices are actually rising they're being
pushed up by wealthy buyers active in
the market it all means increased
inequality
and a lot of these houses aren't even
lived in
an estimated 41 billion pounds worth of
property stands empty in london alone
that's more than the total value of all
property in liverpool
this is in a city with a housing crisis
but owning an empty house isn't illegal
which makes seeing when it involves
dirty money very hard
it's a challenge that britain is finding
tough to take on
the uk talks a good game the one thing
that's lacking at the moment is
sufficient backing for the police for
the national crime agency and for other
agencies that look into this italy the
us some other european countries tend to
invest a bit more on a sort of you know
pound-by-pound basis so to speak in
anti-corruption efforts
the british government spends just under
one billion pounds a year tackling
financial crime
money laundering costs the economy over
100 times that
but weak enforcement isn't the only
reason the uk has become a magnet for
dirty cash
it also has a name for cleaning
reputations as well as money for someone
who's been involved in
money laundering or deals involving
tainted cash reputation laundering is
useful in one particular way and that is
to stymy
investigation by for instance
journalists or ngos we've seen
oligarchs and other foreigners doing
this in the uk if an investigative
journalist is is looking into you you
can strike back a number of public
relations and law firms have come to
specialize in in helping
helping wealthy foreigners to
in some cases appear more safely than
they might be in reality
but since russia's invasion of ukraine
the charm offensive has stalled
the british government has promised to
clamp down on money laundering
and has sanctioned individual oligarchs
how will britain cope without their
money
actually not so badly
rich russians may spend big while
they're here but britain gets less from
them than you might think
in 2020 foreigners held roughly 13
trillion pounds of british assets
russia's share of that was just 0.16
a smaller proportion than that of
finland or south korea
i think there's a question about how
much the money that's coming from
russians actually benefits the the
broader economy
and the potential cost for britain could
be much higher
well there's a huge amount at stake when
it comes to london and dirty money
because london is one of the world's
biggest financial centres and it trades
on being legitimate and on being clean
and on being a place where sophisticated
investors can come and do business and
get financing if the city is tainted
with dirty money ultimately that's bad
for its reputation
britain has had that reputation for
years
but it's taken the war in ukraine for it
to change its tune
golden visas have been scrapped and part
of a long-delayed economic crime bill
has now been passed
no criminal or kleptocrat will be able
to hide behind a uk shell company ever
again
as britain vows to clean up its act
against all dirty money
sanctions against individual oligarchs
are starting to bite
but it was never just about russians
a lot of britain's dirty money is from
other parts of the world
and if shady russian cash leaves dirty
dough from elsewhere could easily take
its place
will britain be as keen on tightening up
on dirty money when it's not russians
behind it
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uk government needs to show that there
is political will there to go after
these oligarchs not just russian there
are plenty oligarchs across the the
world and we've simply not seen that
over the last 20 years in fact we've
actively encouraged that money
to these shores
and that needs to change if we have any
effect at all
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thanks for watching to read more of the
economist coverage of dirty money in
london click on the link and don't
forget to subscribe
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