Cleaning up "Westminster's dirty secret"


The London Laundromat

London has a long-standing reputation for being a playground for Russian oligarchs.  In 2020 the U.K. Parliament's Intelligence and Security Committee published a report on Russia concluding that London was a "laundromat" for tainted Russian money.  Much of this money is invested in property in the affluent London boroughs of Kensington & Chelsea and Westminster.

According to Transparency International U.K., since 2017 Russians linked to the Kremlin have purchased nearly £430 million worth of property in Westminster.

Westminster against dirty money

Russia's invasion of Ukraine on 24 February 2022 resulted in an unprecedented response of economic retaliation rolled out by Western governments against Russia.

The U.K. alongside the EU and the U.S. imposed significant coordinated asset freezes and sectoral sanctions targeting Russia’s financial sector, strategic sectors of the economy and individuals close to the Putin regime.

Alongside the imposition of sanctions, the Government fast-tracked legislation to aid transparency and tackle corruption in the U.K. resulting in the Economic Crime (Transparency and Enforcement) Act 2022 (ECA 2022). 

The ECA 2002:

  • established a beneficial ownership register for overseas entities (ROE) holding U.K. real estate;
  • strengthened unexplained wealth orders; and
  • amended financial sanctions law to make it easier to prosecute sanctions breaches and circumvention, while also strengthening the powers of the sanctions regulator.

Local authorities now want further legislative change and government support for greater powers at council level.

A recent announcement from the leader of Westminster Council Adam Hug, indicates a desire of local authorities to use statutory powers to actively target assets acquired with 'money of a dubious origin'.

The 'Westminster against dirty money' campaign will examine the use of compulsory purchase orders in order to seize luxury homes in Westminster belonging to Russian oligarchs which have been bought with 'dirty money' and turn these houses into affordable housing.

Cllr Adam Hug said:

"Westminster's dirty secret has been known for many years, but those in power looked the other way for too long as money from questionable origin flooded into London.

It took the war in Ukraine to refocus attention on oligarch investments and what London has become in terms of a European laundromat for dirty money".

Seizing luxury homes from Russian oligarchs to house those most in need is not new rhetoric.  In March 2022 the then Cabinet minister Michael Gove announced that the Government was exploring the option of using sanctioned oligarchs' mansion homes in Britain to house Ukrainian refugees.


Michael Gove's announcement was met with a lot of criticism and he later conceded that the Government faced a "high legal bar to cross" to enforce this policy, with many legal commentators and ministers expressing concern that current sanctions legislation prevented him from doing so.

Similar obstacles are likely to be encountered by Westminster Council in its bid to tackle economic crime.  Despite the introduction of the ROE a lack of transparency over property ownership remains and the limited powers and resources of Companies House to conduct extensive checks on the registration of companies are likely to hinder the Council's efforts.

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