LONDON — London has become the money-laundering capital of the world with billions of dollars in stolen funds illegally hidden in the city’s booming property market, according to an investigation that will be broadcast Wednesday.
A team of undercover reporters, one of whom was disguised as a corrupt Russian politician, secretly recorded some of London’s top real estate agents offering to help facilitate illicit transactions despite British laws that require the agents to report suspicious activity to the authorities.
Openly bragging to the property brokers that he had pocketed millions in back-handers, “Boris” explained that he was a Russian health minister. All five of the real estate agents approached, who stood to gain commissions of up to $500,000, appeared willing to recommend ways to hide the money through offshore companies or passed on details of lawyers who might be able to do the same.
Roman Borisovich, the anti-corruption campaigner who posed as Boris, said he was stunned that none of the brokers challenged his legal ability to purchase the properties.
“It’s just appalling,” he told the makers of From Russia With Cash. “The fact that they would all suggest different ways of going ahead with the deal with clearly stolen money; this is brazen, this is in their face, and all of them are willing to proceed.”
In the undercover footage, “Boris” clearly explained that the money he had made personally while procuring drugs for the Russian health-care service could never be discovered. “The most important thing is I need to buy it very discretely—I’m a Russian government official. Every contract brings a little to my pocket,” he told one of the unsuspecting real estate agents.
“Nobody is surprised, nobody is shocked, it’s business as usual,” he said afterwards.
While some of the real estate agents, who were selling properties worth up to $25 million, said they didn’t want to know the details, others offered detailed advice about how to funnel the cash through shell companies operating anonymously.
None of them suggested there was any reason that the deals should not progress.
Jonathan Fisher QC, a financial crime lawyer, watched in horror as “Boris” and one property marketer, which are known as estate agents in Britain, plotted the purchase of a $15 million home in West London.
“It’s 100% consistent with the using of this mechanism to handle the proceeds of crime—in short to money-launder,” he told Channel 4.
“It’s a miserable and incredibly disappointing account of what estate agents, some estate agents are plainly up to in Central London, and I’d rather thought, naively, that following the introduction of the money-laundering regulations in 2003 that applied to estate agents from that point onwards, I’d rather thought we’d gone past that stage.”
Keith Gorny, a broker at state agency Marsh and Parsons, described on camera that he had identified two offshore trusts in Jersey that specialized in Russian clients. “In terms of structuring the purchase, I’ve spoken to a couple of people. Your best route will be through a Jersey trust that will in turn own a company that owns the property,” he said.
Marsh and Parsons, which advertises with the slogan “The Only Way is Ethics,” denied any wrongdoing and said they would respond fully once they had seen the program.
On camera, Gorny suggested that foreign buyers who insisted on the utmost discretion were a growing part of the top-end London property marked. “80% of my transactions, actually more I’d say now, are to international overseas-based buyers, and I’d say 50 to 60% of those were conducted in various stages of anonymity,” he said.
Chido Dunn, who works for Global Witness, an international anti-corruption organization, said Britain was leading the world in helping criminals hide their assets. “Stolen billions don’t fit under mattresses—people only steal them if there is somewhere safe to put them and the U.K.’s property market is providing that safe haven,” she said. “London is, in effect, the money-laundering capital of the world.”
Ben Judah, author of Fragile Empire: How Russia Fell In and Out of Love With Vladimir Putin, was a consultant on the documentary, which was his idea. “The idea to make it came from a rage at the ‘looting-machine’ at work in London: billions of dollars are being laundered through London property from Russia and all the other dictatorships of the world,” he told The Daily Beast. “This is impoverishing their people and propping up those regimes. The UN estimates corruption enabled by rackets like this kill 3.6m people a year by stealing their public services. Victorian brick has become the global reserve currency of kleptocracy. I came up with the idea for #FromRussiaWithCash to expose how easy it is to launder money in London—and also show how Britain’s elites are themselves being transformed for the ill.”
From Russia With Cash will be broadcast on Channel 4 in Britain, Wednesday at 10pm.