Transparency advocates are calling on Britain to tighten the country’s defences against money laundering and tax avoidance after a massive leak of financial data showed how London is a key destination of choice for some of the world’s richest and powerful people to conceal their cash.
The cache of almost 12 million files shows how wealthy people around the world reportedly set up offshore companies to buy property and avoid taxes. Foreign individuals identified as beneficiaries of these types of offshore accounts in London include Jordanian King Abdullah II, Azerbaijan’s President Ilham Aliyev and associates of Pakistani PM Imran Khan. Abdullah has denied any impropriety and Khan tweeted that his government would take action if wrongdoing is found. Aliyev hasn’t commented. The leaked data, dubbed the “Pandora Papers,” was published by the International Consortium of Investigative Journalists.
Though the purchases are legal under UK law, they highlight the complicated — and often anonymous — financial practices wealthy individuals use to avoid tax, far removed from the everyday experience of most of the population. London is a go-to for the rich and powerful because it’s home to a sophisticated ecosystem of businesses that can help in the process, including creative wealth management firms, highend lawyers and long-established accounting firms.
A 2019 analysis by transparency group Global Witness indicated that around 87,000 properties in England and Wales were owned by anonymous companies registered in tax havens. It said 40% of the anonymously owned properties identified were in London and that the total value of the properties was likely to be more than £100 billion ($135 billion).
For decades, authorities in the UK have pushed a light touch approach to regulation in order to attract foreign capital and talent. Critics say that has been a magnet for tax avoidance, which can be legal, as well as more criminal activities, including money laundering.