The council of Westminster, which oversees some of the most affluent districts of London like Belgravia, Knightsbridge, and Mayfair, is looking to seize Russian-owned properties bought through questionable means to “combat the capital’s reputation as the European center for money laundering,” the council said in a statement.

The investigation will find properties that have been acquired with “money of dubious origin” or “dirty money”—which includes houses bought with cash obtained through criminal activity, such as bribery or theft of state funds, as well as tax havens or elaborate tax-avoiding corporate constructions.

The campaign to sieze these properties comes at a time when the number of mansions in London’s richest residential borough that are linked to Russia has balooned exponentially. The number of U.K. properties whose owners’ principal address is in Russia reached 1,127 in August 2021, according to data released by the Land Registry under Freedom of Information laws last year. That marks a 1,200% increase since the start of 2010 without including the other properties linked to tax-haven countries like Jersey and Seychelles, which may also be linked to Russian addresses.

The local council, which recently appointed Labour leader Adam Hug as its Councillor—its first non-Conservative party leader in 58 years—plans to overhaul the previous system and make it harder for properties to be bought with questionable money in the first place.

 “Westminster’s dirty secret has been known for many years, but those in power looked the other way for too long as money of questionable origin flooded into London and investors took advantage of our relatively lax laws,” Hug said in a statement.  

“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,” Hug said.

Kremlin links

At the start of the war, an analysis compiled by Harness Data Intelligence found that there are 1,895 Russian-owned properties in London alone, over three times higher than official figures, with most located in the heart of the city. The borough of Westminister, which has 218 mansions owned by Russian citizens, is home to Belgravia’s Eaton Square, which earned the nickname ‘Red Square’ due to its popularity among Russian billionaires.

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

But despite the ostentatious display of oligarchic wealth, the City of Westminster council will have a lot of difficulty in finding which houses are Russian-owned. The lack of an open register of property ownership and a failure of government bodies to scrutinize company registrations make it easy for foreign home buyers to scrub their records and take advantage of the London’s relatively lax laws and minimal tax rate.

Hug notes the dirty money flowing into London has damaged the city’s reputation by supporting authoritarianism abroad and added that it “drains the vitality of areas with empty or underused homes.”

Hug is meeting with property owners, experts, and officials to launch the “Westminster against dirty money” campaign, which will call on the government to restrict the use of tax havens, increase funding for the national crime agency and HMRC to fight money laundering, and seek to require stronger identity checks when people buy houses and register companies.

Hug also wants stronger background checks on Companies House, which is a registrar of all U.K. companies, where people can set up a business entity for as little as £12. Hug is calling on this price to be increased to £50 due to the little scrutiny the companies have, citing SpyPriest Limited, the company which lists its chief officer as “Adolf Tooth Fairy Hitler.”