A new law in the United Kingdom requires offshore companies investing in its real estate market to declare their beneficial owners, promising to reverse London’s notoriety for allowing suspicious funds to flow into its properties through offshore shell companies.
This is a huge impact following a joint investigation between PREMIUM TIMES (PT) and Finance Uncovered (FU), which in a series of reports revealed a massive wave of funds flooding the London property market through secret front companies of Nigerians, including PEPs, PEPs.
Created by the Pandora Papers project, coordinated by the International Consortium of Investigative Journalists, the PT-FU collaborative work has revealed 233 properties in the UK worth £350 million at present value that were secretly purchased by 137 wealthy and politically exposed Nigerians using 166 anonymous offshore shell companies. companies.
A new law, the Economic Crimes (Transparency and Enforcement) Act 2022, establishes a Register of Overseas Entities, which is maintained by Companies House in the UK. The registry requires foreign companies that own, sell or buy real estate to declare their beneficial owners, thereby making it possible to verify the sources of funds used to acquire such property.
Prior to the new regulation coming into effect this month, people could launder suspicious funds through notorious secrecy and tax havens and hide behind front companies registered in those havens to anonymously buy property in the UK, especially in the capital London.
Among the exposed Nigerian PEPs in our joint PT-FU investigation were Mohammed Bello-Koko, Chief Executive of Nigerian Ports; Gboega Oyetola, Governor of Osun State; Stella Odua, senator and former minister; and Stella Ogene, lawyer.
they hid behind front companies secretly registered in tax havens to anonymously acquire London property, thus evading increased due diligence in the UK and blocking the Code of Conduct Bureau in Nigeria to determine their true worth or if they had amassed wealth, their legitimate income would not could be justified. .
The UK has been criticized for paying lip service to international corruption by leaving a legal loophole to allow foreign companies to own property without having to declare their beneficial owners.
Speaking at the 2021 Anti-Corruption Lecture for Transparency International UK in London, WTO chief and former Nigerian finance minister Ngozi Okonjo-Iweala condemned the UK for paying lip service to the fight against illicit financial flows, IFF.
She accused the UK of harboring agents, including bankers, lawyers and real estate agents, who cater to corrupt officials from Nigeria and elsewhere seeking to invest in expensive London property through anonymous offshore shell companies.
“The Pandora Papers – like the Panama Papers before them – shed light on this shadow economy of tax evasion, luxury homes and shell companies,” Ms. Okonjo-Iweala said.
The consequences of corruption and the ICF include undermining peace, democracy and sustainable development in Nigeria and other corruption-stricken countries, while damaging the morale and long-term interests of countries in the Global North such as the UK, whose jurisdictions often serve as both conduits and destinations for dirty money.
With the new open registry, the UK stated that “foreign entities that wish to buy, sell or transfer property or land in the UK must register with Companies House and tell us who their beneficial owners or managers are to be registered.
“Those who do not comply will face severe sanctions, including restrictions on buying, selling, transferring, renting or charging for land or property in the UK.”
Affected companies must comply by January 31, 2023, and the law applies to those who purchased property from January 1, 1999 in England and Wales and from December 8, 2014 in Scotland. But for Northern Ireland, this is from August 1, 2022, when the law came into force.
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“If you do not comply with this law, you can be fined up to £2,500 a day or sentenced to up to 5 years in prison,” the UK said. You will also face restrictions when buying, selling, transferring, renting or charging for property or land in the UK.”
Nigerian government officials featured in our Pandora Papers reports will now be required to claim ownership of the offshore companies that were used to acquire their London properties.
Despite public promises following our investigation, Nigeria is not known to have taken any law enforcement action against the exposed officials. The Bureau of the Code of Conduct is the country’s official body responsible for enforcing laws relating to the ownership of assets and the declaration of public officials.
Nigerian law requires government officials to declare all assets owned domestically and abroad, which must be evidenced by their legitimate income.
Samuel Azimi, an anti-corruption campaigner at the Center for the Legislative Defense of Civil Society/Transparency International in Nigeria, said the new UK registry was a “good move” from a country facing “criticism for not doing enough to prevent infiltration illicit wealth to your country.” shores.”
“While destination countries of dirty assets bear the primary responsibility for ensuring that ownership cannot be hidden within their jurisdiction, it is equally important that the countries of origin of these assets use intelligence from disclosed registries to conduct investigations.” said Mr Azimi.
“We hope this move will increase accountability for the unexplained sources of wealth held by PEPs and others.”
Meanwhile, the new registry states that where beneficial owners are not available, “managers” must be listed.
“The use of managers instead of beneficial owners is on rare occasions a concern because these PEPs may want to hide behind managers to hide their identity,” Mr. Asimi said. “This should be properly controlled. However, overall, the registry is a welcome policy development.”
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