The bizarre assassination attempt against a former Russian double agent and his daughter in Britain has unleashed a spate of intense debate on the fortunes of so- called Russian oligarchs, especially those close to President Putin, and their wealth in Britain as well as the wider question of money laundering in UK real estate.
It is widely assumed that the offshore finance industry puts trillions of dollars worldwide beyond the local taxman’s reach but there are legal and jurisdictional issues as no one can actually agree on what a tax haven is. The issue is simple: one person’s tax haven is another’s “offshore financial centre”.
No one can also agree on how many there are, as new one is popping up all the time, .nor on exactly how much money is stashed offshore. The industry’s key word is privacy, or secrecy - a word it doesn’t like so much but that is what it is in reality. As one taxation expert summed it up nicely: “Those who know don’t talk. And those who talk don’t know.”
And so a guessing game begins on how much is stashed away in these centres with some putting this at about 10 percent of global Gross Domestic Product or $7.8 trillion, and others at $10 trillion.
Others put it at a mind boggling $36 trillion – twice as big as the US economy. But no one really knows but what is known is that money is disguised and laundered by owners to hide its original source.
This is often done legally through double taxation; tax inversion; trusts; shell companies, but the question is whether these methods are ethical or not. The legal reasons are seemingly innocent and some stem from self preservation of wealth and passing these to future generations or keep it out of the reach of would be creditors.
Staving off creditors
Transparency International, which tacks global governance and corruption index says it is far too easy for criminals to bring dirty money into the UK. According to those investigating money laundering activities in the UK, corrupt individuals cannot steal public funds unless they have a getaway vehicle and anonymous companies are the getaway vehicle and UK assets, such as property, are the safe haven, prompting Labour shadow chancellor John McDonnell, to state that the UK has become the money laundering capital of the worldDr. Mohamed Ramady
What makes this a vicious circle is that many governments are fully prepared to sanction offshore finance to generate income and what is worse is that many people in government use it, whether inadvertently or not, as in the case of former UK Prime Minister Cameron’s trust, as these leaks show.