How London became the dirty money capital of the world | FT Film

How London became the dirty money capital of the world | FT Film

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[Music] there's no question that london is the dirty money capital of the world the uk didn't just turn a blind eye to russian money we welcomed it for many decades now london has been rolling out the red carpet to corrupt and criminal individuals from around the world britain is a very open financial hub it's really important you have really clear well-enforced rules and that's something britain simply doesn't have there are key aspects of our legal and financial system that makes the city of london a great place to bring dirty money and launder wealth the russians have accounted for about a billion pounds worth of residential property in london we have now woken up dirty money's being seen for what it is which is a poison to democracy it's taken the real slipping of putin's mask an act of aggression so appalling the uk appears to have completely lost its moral compass this is really a tale of two empires the british empire and the soviet empire and the british empire as it unravelled retained lots of outposts british virgin islands channel islands that needed a new purpose and the purpose they found was as providers of financial secrecy shell companies corporate camouflage ways for people to move through the globalizing economy without leaving their fingerprints on anything the engine of the multi-trillion dollar offshore industry rife with dirty money this is how corruption went global while the british empire was doing that soviet empire was collapsing too greatest act of corruption the world has probably ever seen the scramble in a few years in the 90s to grab the wealth of the entire soviet empire create this oligarchy that went then surging out into the world and where this all meets is london the place where dirty money comes to party the origins came with the big bang under margaret thatcher when she started liberalizing the financial services sector you booked me a client i will sell you half a million at six seven three and then that carried on under the labor government with a mission on deregulation david cameron i think got it thank you very much after he left office people have simply refused to take on the challenge to eradicate dirty money from london over the past two decades the uk has really welcomed in russian money of all kinds law firms real estate agents the government there are statements on the record from boris johnson our prime minister from when he was the mayor of london saying that he wanted to make london a hub for russian money the stock exchange welcomed lots of russian companies wanted them to make the uk and london their european base one of the reasons why britain has got into this hole is that britain's ruling elites believe that you should get out of the way of businesses at all costs so if you're a senior civil servant what you need to demonstrate to ministers is that you won't cause trouble for business we see it all the time in things like failures of financial regulation before the financial crisis failures are building regulation they've been exposed by the grenfell tower fire the golden visa schemes which were introduced in 2008 the golden visas were introduced by the labour government to attract wealth and capital into london if you had enough money you could buy citizenship in theory there were checks on this but in practice they didn't work of course it was abused by oligarchs and kleptocrats who wanted to bring their dirty money into london and use the scheme to establish legitimacy and credibility in what it was seen as a trusted jurisdiction it's quite a remarkable idea that citizenship is for sale at all it is a scandal that i've been pursuing for many years and i'm delighted the government has finally abolished the scheme peaked in about 2012 when i think around 1200 golden visas were issued that year 60 percent were actually for either russians or chinese [Music] if you've seized power in kazakhstan moscow venezuela wherever it may be you are enriching yourself of the fat of the land you stick it in london and what comes with it in london at this full suite of services for putting a legitimate face on yourself let's say you wanted to bring dirty money into the city of london and integrate it into the system there are basically four key stages placement layering integration and defense so let's start with bringing your money from say a latvian bank account a cayman bank account you want to then move that into a uk shell company it's possible to spend gigantic amounts of money in the uk economy with a mascot you're supposed to tell the company's house registry who the real owners the beneficial owners of companies are but in practice it's really easy to evade those rules and fundamentally no one goes after companies that just lies essentially a wild west of information which is unverified and in some cases ludicrous you can put forward any name hide your identity there are adolf hitler's and donald ducks and mickey mouses it is so easy to register a company on companies house costs 12 pounds you can do it in minutes and crucially no one checks the information usually the applications are approved within 24 hours they don't actually have the statutory power to check the information to investigate false information or remove it from the register now there are some addresses within the uk that have thousands of companies registered to them and if you go and knock on the door you won't find staff they are literally being set up as a shell to hide the true ownership of who really controls and benefits from the money flowing through that company this is a crucial area that the government says it wants to tighten up but this is one of those reforms that's been talked about for years and nothing has been done [Music] the next stage you want to layer to move this money around in a series of complicated financial transactions that will distance you from the money and from your source of wealth that's where the uk banks come in some 86 banks have been involved in obtaining moving corrupt wealth around the world the cash by the time we've got to london has probably already gone through a couple of british overseas territories like the british virgin islands step three is you want to integrate your wealth into the uk system you want to buy assets including uk property lawyers real estate agents are on hand to help you do that [Music] once you've got the cash into london you can then basically use it like it clean people aren't bringing this money on shore to like to put into drug gangs right they're putting it on shore to buy houses in kensington the buying really started with mr abramovic i was showing him various properties which eventually bought one in kensington in excess of 90 million their fortunes were enormous they were a target for state agents in london have you got a russian type conversation was going around the agency typical russian buyer would be looking for a substantial home larger than most grade one grade two listed location would be belgravia mayfair knightsbridge there wasn't that much stock but when anything did come available your thoughts will immediately find one of these oligarchs who wanted to buy one you can own uk property through a shell company even an offshore shell company and if you do own it through an offshore shell company you don't have to say who really owns that property and lawyers are on hand to advise on these complicated transactions which creates an opaque ownership structure of some of our most valuable uk homes roughly 84 000 homes here in the uk are owned anonymously we have identified 6.7 billion pounds of uk property that has been bought with suspicious wealth 1.5 billion of that that's around 150 land titles has been purchased by russian individuals who are either accused of corruption or have close links to the kremlin we found 830 million pounds worth of uk property owned by russian individuals through shell companies based in our crown dependencies and overseas territories and there's been about 10 to 20 important houses sold to oligarchs they normally had a third party it could have been a lawyer it could have been an intermediary you didn't really have much dialogue with the principal and a fleet of cars would arrive and all blacked out windows he subsequently realized there were some very unpleasant situations occurring with people being murdered and falling out of windows the recent events in ukraine have demonstrated that all one's earlier thoughts suspicions are as bad as they could ever possibly be if those buyers invested money here was to launder it then you wish you hadn't had anything to do with it finally you want to defend your wealth and your reputation and the city of london is the perfect place to come if you want to do that our libel laws which are very claimant friendly make the high court a perfect place to bring your blockbuster libel claims the city of london is home to some of the top law firms in the world who can help you bring them when questions are asked about polygox find investigative journalists including those at the financial times the lawyers try to shut them up i've had a bit of experience of doing battle in the high courts with powerful figures from the former soviet union there's an entire industry based in london the big heavy duty reputation management law firm they harang the press and broadcasters newspapers are vastly outgunned there's often vexatious cases that are brought solely to just run up bills to delay things to cause problems to make editors think oh god do we need to do this so even when we try to expose the wrongdoing the kleptocrats use their resources to close down the conversation and the lawyers make a lot of money but support the oligarchs we were involved with one case we were owed money and we wanted to settle it but they said no we're not going to pay you so we had to go to a court very large individual came to our door one day and made it clear to us we should uh drop the case a man had quite a number of gold teeth and he was built like a gorilla it was threatening one of the attractions of being in london is the network of lawyers accountants oligarchs kleptocrats do deals english law provides a stamp of legitimacy we've identified 81 law firms 86 uk banks and surprisingly 177 uk education institutions that have accepted or moved dirty money from around the world russians own our newspapers their children are in the elite public schools their properties are in mayfair we have so one or two properties where people are now on the sanction list it does make you think am i doing the right thing look at the house of lords and the number of fortunes made in the soviet union either by nationals from the former soviet union or peers who rent out their legitimacy to highly questionable oligarchs to sit on the boards of their companies look at the political donors who buy access to our most senior elected officials from the prime minister down i'm often asked to address political representatives from the commonwealth on how to ensure proper accountability i now do it with shame i feel phony not just because of the way we've allowed dirty money to come into the country but because the way that dirty money has infected the public domain and then infected our politics go back to the way we responded to the kovid pandemic we talked about a chamocracy meaty contract look at say lord lebedev does it matter that he's the son of a former kgb officer does it matter that his fortune was earned in a place run on kleptocratic rules does it matter that tory donors have roots in the russian kleptocracy who will of course insist that they are just legitimate business people but the source of their wealth isn't ultra corrupt system they are connected at every level we have city grandees lords former ministers sitting on their boards the integration of russian business with london's political and business elite is complete you can buy a bit of university and name a wing of an art gallery after you and suddenly you're either an entrepreneur or a statesman as opposed to being a thief or a despot [Music] britain is a very open financial heart but always be vulnerable to dirty money coming into the country and it's really important in that situation that you have really clear well-enforced rules and that's something britain simply doesn't have there have been huge questions asked for years about the uk's record on enforcement often uk law enforcement agencies are simply outgunned by the big lawyers that worked for corrupt and criminal individuals the serious fraud office for example has a budget of 50 million pounds a year any self-respecting oligarch makes that amount of money in less than a week i really hope that the uk government will make sure the national crime agency the serious fraud office and others have teeth that can bite we had to have a war to bring this all to a head and it's a shame that so many people have died as a consequence of it the crisis in ukraine has marked a real turning point we are waking up now because a kleptocrat has sent troops into a neighboring democracy to the fact that this dirty money is a weapon the kleptocrats are at war with democracy there are a series of legislative changes that have been talked about for a really long time and the government has delayed and fails to implement those things over a really long period and that's how we've got to where we are now david cameron promised me in 2015 2016 that he would bring in a bill enable us to have a public register of the beneficial ownership of properties that had been acquired through foreign entities the economic crime belt that the government has recently passed is landmark legislation that brings forward the long promised hand-delayed property register overseas companies that purchase a uk property have to tell the land registry who really owns and controls those companies one hopes that that is the beginning of the end of people hiding behind offshore vehicles everybody will have to account for being the beneficial owner on anything whether it's an airplane a a yacht or a home the economic crime bill makes sanctions easier to impose unexplained wealth orders easier to pursue unexplained wealth orders were a new investigative tool given to law enforcement agencies in 2018 it's a type of court order that compels someone with assets of over 50 000 pounds to explain how they could afford them if it doesn't seem to make sense there have only been four cases where they've been successfully used and the amount seized is tiny part of the problem is the costs of being unsuccessful and bringing them the new economic crime bill basically caps the amount of liability that police forces can have if they're ordered to pay costs we are going to get an economic crime bill 2.0 in a few months time i really hope that the next economic crime bill really gets a handle on some of the loopholes that still remain [Music] kleptocracy spreads like a virus and it starts to change how people treat power with all this dirty money that's arrived in the uk with all these fortunes made in kleptocracies you've got to start to wonder is our political system becoming more corrupt as a result to bring an end to london grads london could become much less open we can take serious steps to limit the capacity of some types of people to come here the political consensus is around if you like the second option which is keeping london there's this very open rules-based place but by trying to introduce new rules into the system to make it harder for people who are really bad actors to disguise their money the government's approach to sanctions has been far too little far too late it's a knee-jerk response to a horrendous act of kleptocratic aggression by one of history's great kleptocrats we have shown an amazing tolerance up to this point to people we consider to be so plugged into putin's regime that if we confiscate some of their wealth that will make this man change course i first raised the issue of abramovich over a year ago when the leader of the opposition in russian navalny was imprisoned by vladimir putin navalny said there that if the west really wanted to support democracy we ought to take action by sanctioning putin's cronies around him at the time the government took no action it's important to remember that this is a much bigger problem it may be you know called london grad but actually this is not just about russia and our response seems to be we want to try to pressure one kleptocrat we need to dismantle our complicity in kleptocracy wherever it comes from clamp down massively on secrecy in the economy and provision of secrecy by large parts of the former british empire the uk is in a uniquely strong position to crack down on kleptocrats because of our position as the so-called capital of money laundering fawning service to this dirty money over all these years has now ironically put us in the position to land the biggest blow there are going to be clear costs to the measures that the uk has taken exodus of businesses from russia we have also seen from the professional services and law firms that are based in the uk announcements that they are going to refuse to do any more work for russian clients there will be a financial cost to that dirty money has benefited certain sectors in the uk there are professionals who have benefited in monetary terms from the dirty money flowing through the uk from the services we offer but there are many people in the uk who have not have been economically enriched what sort of society do we want i will believe it's the end of london grad when i see it there is a huge gulf between talking tough on things like sanctions dirty money and economic crime and doing something about it the uk is guilty of laundering the world's dirty money we help facilitate global corruption we in the west decided that we would march into russia bankers consultants entrepreneurs lawyers and remake this collapsing communist empire in our own image that we weren't remaking the former soviet union in our image the new kleptocratic order was remaking us in their image this dirty money is poisoning our democratic institutions suborning politicians to serve the interests of this international tiny oligarchy it's undermining the free press these are the only things that separate us from these authoritarian regimes these institutions and this dirty money is corroding [Music] [Applause] [Music] you

2022-04-30 01:37

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