Opaque Trusts Hide Wealthy Property Owners in the UK
Research suggests that the owners behind properties valued at £15 billion in Britain and Wales are obscured by opaque trust structures. This has led to claims that such setups are often the favored method for wealthy individuals looking to protect their financial interests in the UK.
In August 2022, the government implemented a property register for those using offshore vehicles, which unveiled previously unknown owners, including prominent names like Lewis Hamilton and James Dyson, along with notable figures connected to sanctions and Gulf royalty.
Despite this, the registration system provides a way for many property owners to maintain anonymity by registering assets under the trust’s name or through companies owned by the trust.
A report from Transparency International indicates that approximately 236,500 properties in England and Wales, amounting to over £64 billion, are concealed within these “opaque” structures. The organization warns that this situation may enable wealthy individuals, particularly those with ties to corruption, to shield their assets.
Further, Transparency International pointed out in a government report that trusts could undermine the government’s sanctions regime concerning Russian individuals, as they allow for the concealment and movement of wealth.
There are calls for the government to close these loopholes and ensure that the ultimate owners of properties held in trusts are disclosed.
Joe Powell, a Labour MP and chair of the All-Party Parliamentary Group on Corruption and Taxation, noted that about 40% of overseas properties in his constituencies, particularly Kensington and Chelsea, are held via trusts. He emphasized that even though there has been progress in combating corruption, trusts present a significant gap in the UK’s transparency efforts.
Powell expressed concern that this loophole could lead to greater hidden ownership and hinder anti-corruption initiatives. He suggested that bringing trust ownership into the regulatory framework could address crucial deficiencies and support the government’s broader anti-corruption ambitions.
Transparency International showcased an example of a concealed structure—a £61 million London apartment associated with a Russian oligarch’s partner—that wasn’t frozen by the Treasury, unlike similar properties in France.
Margot Mollat, a senior researcher at Transparency International, mentioned that trusts are prime vehicles for individuals looking to hide their assets and avoid sanctions. She stressed that if the UK aims to be a leader in global anti-corruption efforts, the trust issue must be addressed.
The government is currently contemplating allowing law enforcement third-party access to trust registration services.
Transparency International has proposed various measures, including creating publicly available information on trusts related to land ownership, along with the names of beneficiaries and settlors. They also advocate for acknowledging trusts that directly own land in the registration process to ensure accurate ownership records.
Additionally, they have called for the government to address a significant gap in the existing trust register by capturing information about trusts that acquired land prior to October 2020 and disclosing details of foreign trusts that hold UK properties.
A representative from the Ministry of Finance stated that the government has frozen £25 billion in Russian assets and worked with allies to seize over £300 million from Russia, equivalent to years of military expenditure.
They confirmed their commitment to upholding robust financial sanctions as part of their overall response to Russia’s invasion of Ukraine.
