Westminster launches "war on dirty money" with campaign against money laundering, call for changes to procurement laws

Westminster City Council has made a fair tax pledge and called on the Government to tighten UK procurement law as part of a new campaign that it described as a "war on dirty money".

The council said its decision to adopt a 'Dirty Money' motion at a full council meeting yesterday (21 September) made it the first UK local authority to launch such a campaign.

The motion included a commitment to approve a 'Fair Tax Declaration', which the council said marked "a key step to lead by example and demonstrate good practice in our tax conduct, right across our activities".

Westminster will join 31 other councils who have signed the declaration, established by the Fair Tax Foundation.

Under the motion, Westminster also called for tightened procurement laws to help restrict the artificial use of tax havens and low-tax jurisdictions, noting that current and proposed UK procurement law "significantly restricts councils' ability to either penalise poor tax conduct (as exclusion grounds are rarely triggered) or reward good tax conduct, when buying goods or services".

In addition, Westminster pledged to "ensure the fair payment of taxes, business rates and employment taxes through robust implementation of IR35, not using offshore vehicles for land or property purchase and undertaking due diligence to ensure suppliers are not inappropriately utilising not-for-profit structures".

Alongside the motion, the council implored the Government to include a commitment in the forthcoming Economic Crime Bill to a proper level of resourcing for the National Crime Agency and HMRC to fight money laundering, together with tougher penalties for failing to comply with money laundering supervision requirements.

The Government should also increase the fee to register a company at Companies House from £12 to £50 and introduce more rigorous identity checks, the council said. Government should also properly implement the newly-passed beneficial ownership register of property to deliver transparency about ownership, the council added.

Westminster said it had seen a 300% rise in the number of properties registered to owners in Jersey since 2010 and a rise of 1,200% in the number of properties registered to owners in Russia.

The council said it is "proud of the diverse resident population of Westminster, but this data suggests something troubling, that the use of Westminster as a location to hide ill-gotten gains in the property market is spiralling out of control".

Speaking on the campaign, Council Leader Cllr Adam Hug said: "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 flooding into London and investors took advantage of our relatively lax laws."

He added: "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. But the problem goes wider than Putin and his henchman to many others who see Belgravia, Knightsbridge, Mayfair and other parts of Westminster as places to rinse their money. This not only damages the reputation of our city by supporting authoritarianism abroad but drains the vitality of areas with empty or under-used homes."

"Companies House does not have the powers or resources to address those who set up opaque shell companies to launder and export money from London. There are more background checks required to get a local authority lending card then to set up a company in the UK.

"We want to work with Government Ministers and agencies to crack down on dirty money and ensure agencies like HMRC and the National Crime Agency are properly resourced."

Adam Carey