The so-called Panama Papers had turned the world's attention recently to the London property market, which suddenly became the destination of enormous amounts of money. The Panama Papers leak contained files of over 11.5 million of encrypted internal information from the Panamanian law firm Mossack Fonseca that had led to different reports revealing the foreign ownership of several prime properties from London.
The leak had ignited worries that some multi-million dollar worth of deals were financed by money-laundered transactions. Following the Panama Papers leaks, the United Kingdom's Guardian newspaper had reported that 2,800 of Mossack Fonseca companies had appeared in the UK land registry overseas property owners list since 2014. Some reports also indicated that even Syrian president Bashar al-Assad had associates who purchased property in the capital. However, the said allegations were not confirmed, according to a feature by CNBC.
The method of money laundering included processing of money from sanctioned sources or criminals and then transferring the amount from country to country, company to company, until the original source could no longer be tracked.
The London property is a credible option for criminals who plan to make dirty money appear clean, as explained by law enforcement agencies. Aside from the system which could make it easy to hide which properties individuals own in the UK, the political stability of the country, including its lavish type of lifestyle can made the capital an appealing place to purchase trophy assets, according to a feature by the Forbes.
In addition, the city has a broad and high competitive professional services industry that provides the advisory, legal and financial assistance required to purchase a house. These agents are responsible in raising the go signal if they sense some corrupt money being played, although the UN data only indicate that a small fraction of transactions dealing with laundered money are ever flagged.
The Panama Papers have put an increased pressure to the demand for more tightened rules with the hope of stopping the illegal money from soaking up the London property market.
