The “creeping tendrils of the Kremlin” have been allowed to wrap themselves around the UK and turn London into a global money laundering capital, Keir Starmer has said, as he accused successive Conservative governments of failing to act on the threat.
In an excoriating attack on the government’s stance on Russian influence within Britain, the Labour leader said that the UK needed to get “our own house in order” as it unites with the west to confront Vladimir Putin.
The warning comes as new figures obtained by the Observer show nearly 30,000 properties in England and Wales including mansions owned by the Russian elite are registered to companies and individuals based in the British Virgin Islands (BVI). Most of the owners are unknown after delays in a government pledge to end secret offshore ownership of property.
Writing in the Observer, Starmer says greater transparency, more powerful counter-espionage measures and new anti-corruption laws are required to combat money laundering in the UK. He said that Putin deployed illicit money and influence “as a judo move that turns the openness and freedom of western democracies into weaknesses”.
“Over almost 12 years of Tory government, the creeping tendrils of the Kremlin have been allowed to wrap themselves around the UK,” he writes. “A cottage industry has been created that directly and indirectly does the bidding of those linked to Putin.”
He said a new report by the anti-corruption organisation Transparency International had revealed how £1.5bn of UK property has been snapped up by Russians accused of corruption or linked to the Kremlin. “They are not buying here for the weather: they see us as a soft touch, where they can hide cash with few questions asked,” he writes.
New figures in a separate analysis obtained by the Observer show the BVI is a main low-tax offshore jurisdiction for companies and individuals owning property in the UK.
The analysis by the Centre for Public Data, a UK non-profit organisation, of the most recent property data reveals 21,496 property titles in England and Wales are registered to companies in the BVI and another 7,898 are registered to individuals.
The BVI does not disclose company owners and many of the individuals who are property title holders are nominees acting for offshore trusts. Experts have established that a number of these properties, including some of the country’s most expensive homes, are linked to Russian billionaires.
Anna Powell-Smith, the director of the Centre for Public Data, said: “These figures show the extraordinary role the British Virgin Islands plays in the UK property market.
“It is over five years since the government promised to clean up the UK property market by publishing the true owners behind secretive offshore companies. The legislation is ready, but progress has stalled.”
The BVI has committed to introducing a public register of company ownership by next year, but the exact details are yet to be confirmed after officials said some individuals should still be entitled to privacy. It was reported by the publication EUobserver this month that the BVI is expected to be added this week by the EU to a “grey list” of tax havens.
Ministers are under mounting pressure amid claims that lax anti-corruption measures have allowed suspected illicit funds into Britain. The Observer reported last month that the government was being urged to suspend its tier 1 investor visa scheme, the “golden visa”, over concerns that the super-rich from Russia and other countries had been fast-tracked for UK residency without proper checks.
The home secretary, Priti Patel, announced last week the scheme was being scrapped with immediate effect as part of a “renewed crackdown on illicit finance and fraud”.
The tier 1 investor visa programme allowed people with at least £2m in investment funds and a UK bank account to apply for residency rights. The speed of their application for indefinite leave to remain was dictated by how much money they had to invest. In the year to September 2021, 798 investor visas were issued, 82 of them to Russians.
David Davis, the former cabinet minister, said: “I think we have at least 700 Russian multimillionaires in the country. We have been too slack.” Of the golden visas, he added: “It seems to me that the natural next step is to review all the ones that have been given already with a view to ensuring that the source of the wealth that has allowed them to come here is acceptable to the United Kingdom.”
Ministers say they will implement a package of measures to help combat financial crime. A government spokesperson said: “The government will establish a new beneficial ownership register of overseas entities that own UK property, in order to combat money laundering and achieve greater transparency in the UK property market.”