British realtors are afraid of losing Russian investors
A public register of owners of companies owning real estate in the country will be introduced in the UK.
On May 12th, the first global anti-corruption summit, which was attended by representatives from more than 40 countries, took place in London. In the course of multilateral negotiations, its chairman, British Prime Minister David Cameron has promised to carry out reforms aimed at the prohibition of anonymous real estate purchases. In particular, in June, a public register of owners of the companies owning a residential and commercial real estate in the UK. The requirement for the disclosure of tax and financial information about the ultimate beneficiaries will be extended to the Overseas Territories of the country, the world famous offshores. While another states participating in the summit express their intention to support these measures at the national level, the British realtors are ringing the alarm.
- These innovations will lead to the fact that buying property in key global centers of the world will become even more difficult and expensive, said Tom Bill, the expert of the Knight Frank consulting company to the CrimeRussia.
But the British real estate market experiences hard times as it is due to the fall of oil prices, instability in the world financial and currency markets, as well as, to a large extent, the tensions between the EU and Russia. Thus, experts say, from 2014 the real estate prices in London are falling every year by 10-15%, while the number of transactions in the amount of £ 5-10 million (about 460-930 million rubles) went down by half.
According to experts, as a result of the reform, the UK may definitely lose attractiveness in the eyes of foreign investors. Especially it can affect the Russian clients, which are known for their love of the real estate in "Foggy Albion" and the British offshore companies as a whole. According to Knight Frank, the first place in the list of foreign buyers of London houses is occupied by Russians, who have spent more than £ 500 million (more than 46.6 billion rubles) only in 2013.
According to the date from the "Idinaydi" real estate blog, Russians often buy real estate in Bulgaria, France, Spain. In general, on the beach, to spend their holidays or relax after retirement. The UK is only the tenth in popularity, but it has exceptional advantages. And it's not just a bout the famous national education.
- London is the world's largest "washing machine" for money laundering, says the anti-corruption activist, an immigrant from Russia Roman Borisovich. According to the international organization Transpanrecy International, offshore companies from the British Virgin Islands, Panama and Jersey own about 36 thousand real estate items. In the elite quarter of Westminster it is every tenth house.
Tom Bill sees two reasons for buying the UK property by Russians through offshore companies. First, until recently it was effective in terms of taxation. In particular, by acquiring of residential property in this way the owner is exempt from inheritance tax of 40%. However, the government has already approved the abolition of the exemptions from the next year. Secondly, until recently, the buyer often operated through offshore structures in order to not to disclose his name. The reform announced by David Cameron is aimed to fight such anonymity.
According to the Prime Minister, overall, in England and Wales, foreign companies own about 100 thousand real estate items of which 44 thousand are located in London. At the same time, according to the Transpanrecy International, from 2004 to 2014, the British capital's property of a total value of £ 180 million (about 17 billion rubles) was subject of the police investigations related to corruption cases.
- With the new registry corrupt individuals and states will no longer be able to hide and launder "dirty money" through the London real estate market, said the British government.
As a result of the reform the companies whose employees launder money or avoid taxes will face criminal penalties. British Service for financial crimes management will be eligible to initiate cases against them on corruption charges. If the investigation proves that the company failed to take the necessary measures to prevent abuses of their workers, they will also face a multi-million fines.
However, according to experts, nowadays in the UK there are no effective mechanisms for the prosecution of offshore companies if they do not wish to disclose the names of ultimate beneficiaries.
According to some reports, among the latter there may be dozens of high-ranking Russian officials and their relatives. According to Financial Times, the oligarchs from Eastern Europe (including Russia and Ukraine) are particularly active in buying UK property through offshore schemes to hide their assets from international sanctions.
At the same time, according to the law adopted in 2013, domestic civil servants are prohibited "to open and maintain accounts, store cash and valuables in foreign banks located outside the territory of the Russian Federation, to own and (or) use foreign financial instruments". Officials also have to report on their income and their real estate abroad. In the first half of 2015, for concealing such information 4 thousand public officials were prosecuted, of whom 272 were dismissed without further rights to hold public office. And the new British law, as well as possible similar measures in other countries, is aimed at improving the global fiscal and financial transparency, can seriously harm the Russian "taciturns" who can be charged with concealing income and tax evasion.
At the same time, in the current activation of the British anti-money laundering initiatives, many experts saw praying for their own previous sins. Indeed, David Cameron led the anti-corruption summit just a month after the sensational "Panamanian archives" had been published. In them, in particular, there is information about the father of the British Prime Minister who used an offshore fund for tax evasion. On the whole, over 210 thousand companies interests of which are represented by the Mossack Fonseca law firm, from which there was a leak of confidential documents, more than half, namely 113 thousand, were registered in the British Virgin Islands.
- If one wants to lead this global "cleaning", one must first clean up at home, says John Christensen, the executive director of an international Tax Justice Network NGO.
Apparently, five other countries, Afghanistan, Kenya, Nigeria, the Netherlands and France, also affected by the scandal caused by the "Panamanian documents" decided to follow the example of London and run their own public registers of the final beneficiaries of the companies buying real estate. Furthermore, willingness to initiate the necessary changes to the registry in the future was also declared by Australia, New Zealand, Jordan, Indonesia, Ireland and Georgia. Finally, another 11 countries, including "offshore" Jersey and the Cayman Islands announced their accession to the automatic exchange of relevant information in a proprietary format. Finally, the summit announced the creation of a new international anti-corruption center in London, with which the Interpol, as well as several countries, namely Australia, Canada, New Zealand, the USA and Switzerland, intend to work.
Russia was represented in the multilateral negotiations by the Deputy Minister of Foreign Affairs Oleg Syromolotov. On the Russian Foreign Ministry website it was explained that although "the summit decisions can be a useful tool in the work of the specialized anti-corruption forum", they "should not be mandatory."