Labour has called on ministers to push through a long-delayed register of foreign owners of UK properties, saying the Pandora papers illustrated the need to crack down on the use of overseas shell companies to obscure the sources of wealth. Citing the revelations in the vast leak of nearly 12m files detailing offshore structures and trusts in tax havens, reported by the Guardian and others, Pat McFadden, the shadow economic secretary to the Treasury, said changes must be made. He said the registration of overseas entities bill, which would set up a database of ownership, first published in 2018, should be brought to parliament next month.
Writing in the Guardian, McFadden said the controversy about illicit lobbying by now-resigned Conservative backbencher Owen Paterson and the subsequent coverage of MPs’ second jobs showed the need to maintain high standards of public conduct. There was, he wrote, a wider issue of ensuring “that the country does not become a convenient home for more illicit finance”. He said that as well as parliamentary time for the registration of overseas entities bill, ministers must also reform companies’ record-keeping to prevent opaque ownership structures using multiple overseas shell companies. The government should also take action on the recommendations from a parliamentary report into Russian interference in UK politics, published last year after a long delay, and ensure the elections bill changed rules to ensure the sources of political donations were more transparent. Labour was to form “an illicit finance taskforce with the aim of making the UK the most difficult place possible to launder the proceeds of looting and kleptocracy”, McFadden said. He said: “This is necessary because the use of the UK as a place to store or wash illicit money is not just an issue of financial regulation or tax revenue – it is a national security issue and should be recognised as such. “But if the prime minister doesn’t urgently bring forward the four measures Labour has set out today, he may as well be giving yet another green light to tax avoidance.” The extent of the UK’s financial services industry “gives us both a special responsibility and an opportunity”, McFadden wrote. “The responsibility is to show that we are determined the UK will not be a welcome financial home to kleptocrats. And the opportunity is to set standards which will set an example elsewhere in the world. “Underlying all of these is something bigger: a rejection of the dismal idea that politics is simply a gravy train for the self-interested.” The Labour interventions come after a cross-party parliamentary group also called for the register of overseas entities to be set up. The parliamentary group on fair business banking, including more than a dozen Tory MPs and peers, has written to Boris Johnson urging action. “Economic crime and illicit finance in the UK funds organised crime, terrorists and other malicious actors; undermines good governance and faith in our economy; and tarnishes our global reputation,” it said. The National Crime Agency estimates that the total cost to the UK economy of money laundering a year is about £100bn. Moves to create the register of property owners followed repeated calls for action to be taken, including a 2015 speech where David Cameron pledged there would be “no place for dirty money in Britain”.