Transparency International Exposes £64 Billion in UK Property Held via Trusts

Transparency International UK has revealed loopholes in Britain’s property transparency regimes. 

As per the TI report, at least 236,500 properties worth $64 billion are owned through a trust structure in England and Wales. Wealthy individuals and bad actors use Trust to conceal their identities and launder their funds. Although regulatory reforms aim to check anonymous ownership of UK real estate, the latest investigation of ownership information shows that trusts are increasingly being used as instruments to hide actual beneficiaries of high-value assets. 

Transparency International identified: 
“170 properties worth £2.5 billion – purchased using a trust structure with concerning connections to illicit wealth – 138 of these valued at more than £2.1 billion were bought in the last 15 years”. 

A recent report from the UK Government shows that “trusts are also likely hampering the effectiveness of the UK’s sanctions regime”. 

The £8.3 million London mansion, ultimately held by the trust and it is linked to sanctioned Putin ally, Igor Komarov, which was left unidentified by UK authorities. 

The Organized Crime and Corruption Reporting Project revealed  £130 million worth of UK real estate owned by Azerbaijan’s first ruling family, the Aliyevs and their associates.

Many of the properties remained unfrozen and untraced due to the obscurity of trust ownerships, such as £40 million London commercial properties, which are held by a trustee who is a significant member of a Singaporean money laundering gang.

Similarly, the former Malaysian Finance Minister owned £55 million worth of commercial property via trusts. 

The report also reveals that 5,500 offshore owners, owning 23,000 properties, held a trust in their structure.

In 2016, the UK companies’ People with Significant Control (PSC) register disclosed ownership information, but later on no efforts were made during the following six years. Finally, in 2022, parliament issued requirements for offshore companies that hold properties in the name of the Register of Overseas Entities (ROE).

However, trusts remained unchecked regarding ownership structure, hence the Trust Registration Service (TRS) failed to provide meaningful transparency.

As per the report, 

….UK has made slow but steady progress in increasing transparency over those owning land indirectly via companies. 

Finally there was pressure from the Economic Crime and Corporate Transparency Act (ECCTA), for the Government to make trust ownership information available.

It was found that UK companies controlled by trusts hold at least 49,000 properties worth £9 billion. , with no obligation to disclose beneficiaries.  This is a significant loophole in the Register of Overseas Entities (ROE), and Transparency International recommends overcoming it with significant measures.

The situation is more severe when trusts own land directly. Only the trustees’ names appear on the land registry, and beneficiaries’ information remains entirely hidden. 

Although His Majesty’s Revenue & Customs (HMRC) manages the Trust Registration Service,  it failed to investigate money laundering. It lacks beneficial ownership information on trusts that held property before 2020. Due to delays in investigations, limited access, and inconsistent details, there have been considerable gaps in ownership information. 

4000 properties have been identified as owned by 814 overseas companies with the word trust or nominee. Additionally, 105,000 properties owned by 4688 legal entities in the same way. In total, 109,000 properties are controlled by the Trust in England and Wales. 

As per Transparency International’s report:

“Trust structures are being used to hide the owners of over 236,500 properties across England and Wales worth at least £64 billion”. 

Transparency International requires reforms  to close loopholes that are leading to anonymous property ownership through trusts. The UK Government requires full disclosure of trust parties at Companies House, and needs to mandate trust registration with land registries. Additionally , there is a need for granted public access to trust ownership information which can bring transparency, accountability, and fairness to property ownership in the UK.