The days of hiding cash in London properties are over

In the UK, the days of hiding cash in London properties through offshore companies are drawing to a close. The government announced plans to force offshore firms, which own properties in the UK, to reveal their true owners.

These new regulations target corruption and money laundering, and have been widely welcomed by activists. Michael Bowes, attorney and treasurer of Transparency International UK, said, "This is a significant step towards transparency, and there's no valid financial reason for secrecy."

However, these changes could also impact individuals with legitimate reasons to maintain their privacy, such as prominent figures looking to protect their personal information from stalkers.

Emma Watson, the "Harry Potter" actress, spoke out this week about creating an offshore firm on the British Virgin Islands for her own protection. Watson's name appears in a public database of individuals and organizations said to be connected to Mossack Fonseca, the Panama law firm at the heart of the Panama Papers scandal.

While purchasing property in the UK, either directly or through a British firm, means that ownership details are public, under the new regulations, Watson's name would still be published if she were to use an offshore firm. Currently, foreign companies are not required to disclose their ownership structures.

Because they operate within foreign legal jurisdictions, it's difficult for governments and tax authorities to trace the origin of funds used to purchase UK assets. The UK government cannot compel foreign countries to change their laws, but it can prevent anonymous companies from investing in the booming UK property market.

, Premier David Cameron said, "We know that some expensive properties – especially in London – are being bought by foreign parties through anonymous shell companies, sometimes with looted or laundered money."

The new registry of foreign companies means that corrupt individuals and governments will no longer be able to move or launder illicit funds on the London property market.

According to government statistics, foreign companies already own around 100,000 properties in England and Wales, with 44,000 in London. Likely, hundreds of millions of pounds in illicit funds are flowing through the London property market and beyond.

Bowes concluded, "We're probably talking about hundreds of millions of pounds of illegal money flowing into the London property market and beyond."

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The UK government's new regulations aim to combat economic crime, increase transparency and subject offshore companies owning properties in the UK to heightened scrutiny. Prominent figures like Emma Watson may find their privacy compromised under these new regulations.

[Enrichment data]:

1. Offshore companies transferring property ownership leads to issues with land registry, taxation, and risk of money laundering.
2. UK government introduced the Economy Crime (Transparency and Enforcement) Act 2022, requiring overseas entities acquiring UK property to register, disclose beneficial ownership details, and comply with reporting requirements.
3. Indian government's Enforcement Directorate questions wealthy individuals about their overseas stock investments to prevent money laundering and ensure compliance with foreign exchange laws.
4. Tax transparency regulations impose tax obligations on UK companies holding overseas property, with reduced tax loopholes on capital gains tax and inheritance tax exemptions.
5. Stricter enforcement and increased transparency aim to prevent wealthy individuals from exploiting tax loopholes through complex corporate structures.