Michael Gove has warned that the Government must do more to seize lavish UK homes owned by Vladimir Putin’s allies, as ministers fast-tracked plans to publicly reveal overseas owners of British land and property.
The Housing Secretary used a specially-convened Cabinet meeting on Thursday to insist that more action was needed, after independent research suggested that £1.5billion worth of property has been bought by Russians accused of corruption or links to the Kremlin, since 2016.
As part of an initial push to address the issue, No 10 is planning to bring forward an economic crime bill as soon as next week to introduce measures including a register of the ultimate owners of overseas firms that control land and property in the UK.
Tory MPs and peers have been pushing for such a measure for several years to prevent London from becoming a “playground” for Mr Putin’s allies and draft legislation was first drawn up in 2018. The register could still take a year to be brought into operation.
The emergency legislation will also contain measures to bolster the system of Unexplained Wealth Orders (UWOs), under which people can be ordered to reveal the source of their wealth and face having their properties seized if they cannot demonstrate that it was obtained legitimately.
‘McMafia’ orders to be toughened
To date, none of the so-called “McMafia Orders” have been obtained since the end of 2019 and UWOs have only been obtained nine times since their inception in 2018, according to the House of Commons Library.
A Government source said the reforms would give authorities “strengthened powers to investigate and prosecute those corrupt Russian elites who are laundering money and assets in the UK.”
The reforms will bolster the system so that UWOs can be used against “complex ownership structures” including where properties are owned by overseas shell companies, according to government sources.
The plans also include allowing agencies to target company directors who have “some form of control” over properties and giving authorities more time to review material before taking action.
The changes would also prevent authorities from incurring substantial legal costs if they use UWOs “reasonably” – based on the belief that a series of legal challenges have reduced the “risk appetite” for targeting kleptocrats with the measures.
A government source said: “It is time to shut down the racket of illicit money in British property. We are sending a strong signal that the UK’s property market is not open to corrupt individuals and regimes laundering their money.”
More kleptocrats are also expected to be targeted with direct sanctions in the coming weeks, following initial rounds of sanctions announced last week.
