Measures to expose dirty money stashed in UK property are being fast-tracked in order to target Russian oligarchs, Sky News understands.
Boris Johnson has repeatedly promised to “open up the Matryoshka doll of Russian-owned companies” which are often set up offshore so the true owners are not identified.
These companies are used to buy vast homes in London’s wealthiest areas, although MPs and campaigners have for years warned that this loophole can be used for money laundering by people linked to the Kremlin.
Number 10 is now planning to bring forward legislation as soon as next week to create a register for the beneficiaries of overseas firms, which would unmask the true owners and potentially subject them to sanctions.
Although the register would put offshore property owners “on notice”, it is expected the measures could still take up to a year to enforce.
A No 10 source said: “Transparency is key to understanding who should be sanctioned. It’s our ambition to do this early next week but there’s a lot of work still to be done”.
Measures going to take over 24 months to implement
Officials in the Business Department had advised earlier this week that the measures were more than two years from being fully implemented, Sky News understands.
New processes to verify the identities of the company owners – to be carried out by Companies House – were not expected to be introduced to parliament until the autumn, where they could then take months to pass.
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The proposed implementation period for existing property owners was 18 months, but this may now be cut to 12 months.
Another government source said: “The PM is insisting we do it, it’s now a top priority. But we would still be struggling to implement it this year.
“If Companies House can’t verify who these people are, there’s absolutely no point as people can just make up names and addresses.”
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Companies House essential to crackdown on money laundering
Registering a UK company costs as little as £12 and can be set up within 24 hours. It is understood that some MPs have been shocked to find fraudsters using their names and addresses to set up companies.
Separate measures to beef up Unexplained Wealth Orders – a barely-used power created in 2017 to force people linked with serious crime to declare their assets – are also set to be brought forward.
The Russia report published by the Commons Intelligence and Security Committee two years ago, states that the UK offers “ideal mechanisms” by which illicit finance could be recycled through what has been referred to as the London “laundromat”.
MPs on the Treasury Select Committee reported last month that Companies House – which was given £63m in last year’s Spending Review to get ready for the checks, was essential to cracking down on money laundering.
‘Geopolitical’ reasons to bring legislation now
David Cameron first committed to a register for overseas property ownership at an anti-corruption summit in London in 2016. But it was since kicked into the long grass.
Layla Moran, a Lib Dem MP who has campaigned for this register, said: “There’s a geopolitical reason to bring the legislation now. Otherwise, the government is saying to Putin we will give you a good hiding, but first, we need to go and find the stick.
“We do need to do this internationally, but the US is already ahead of us, and the UK taking action would galvanise other countries to bring similar measures”.
Billion pounds of property bought by Russians
Research by campaign group Transparency International suggests there are 90,000 properties in the UK whose owners are unknown to the government and law enforcement.
An analysis they published this week suggests £1.5bn of property has been bought by Russians accused of corruption or links to the Kremlin, mostly in affluent areas of London.
Duncan Hames, director of policy at Transparency International UK told Sky News: “The government can only take action against assets it knows belong to those it now sanctions.
“Measures to reveal who really owns the companies that hold property assets here are needed urgently and should be implemented without delay.”
Mr Johnson has already announced sanctions for 100 Russian individuals and companies which will need legislation to enforce in the coming weeks.
A government spokesperson would not comment on timings but 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.”