the british government is talking tough since the war began in ukraine it's imposed strong sanctions on russia as well as individuals with kremlin connections oligarchs in london will have nowhere to hide london is a wash with russian money these are homes valued at tens of millions of pounds so much so it's even earned a nickname londongrad the oligarchs have come to london bought luxury properties in some cases bought football clubs there was so much money coming in from that part of the world and it's not just russians billionaires from around the globe and their money love to call london home this is wealth beyond anybody's imagination the trouble is it's not all clean britain is one of the best places in the world to launder dirty money why does it make it so easy fasten your seat belts and put yourself in the hands of a magician world-class shopping high society it may seem natural that the super rich would want to live in the british capital but the rise of londongrad wasn't a happy accident it was a business model this is a story that goes back to just after the second world war in the 1950s britain was really trying to deal with a loss of empire and looking for a new role in the world in 1956 the suez canal crisis led to massive sell-offs of sterling around the world in response the bank of england encouraged a radical new kind of market british banks started to borrow not buy american dollars to do deals because they were trading in u.s currency this avoided bank of england regulations but because they hadn't actually bought the dollars it avoided american ones too and that led to the development of what's called the euro markets which essentially means trading currencies of different types outside of their home countries britain had taken offshore banking mainstream the development of offshore banking was was a big turning point because banks generally don't like regulation and what offshore allowed you to do essentially was to to use jurisdictions that had lighter regulation and just allowed more freedom when it came to moving capital around the world and storing it british banking had changed forever and by the swinging 60s business was booming london had become the place to skirt banking regulations and at the same time you had a whole bunch of offshore territories of the united kingdom they were actually encouraged by britain to develop into corporate services and finance from the british virgin islands to jersey by the 1980s britain had a web of overseas territories and crown dependencies that were helping clients to hide their cash and no one seemed to mind where the money was coming from grand cayman's modern claim to fame is as an offshore tax and banking haven then in 1991 the game really changed when the ussr fell ex-soviet nationalized industries were sold off at a fraction of their true value a few canny businessmen got very rich very quickly britain saw an opportunity it goes back to john major and the 1990s the major government introduced golden visas essentially if you were a wealthy foreigner and you wanted residency in the uk even if you didn't intend to spend all of your time there you could to pay a large investment to win that right even at the time the scheme had its critics it seems quite astonishing to me anybody who's laundered money or simply to buy a a ticket to to britain but the bait worked investing a million or two was a small price to pay for a billionaire russia's super rich flocked to make london their second home londongrad was born a lot of the money that comes here is perfectly legal but tens of billions of pounds of it isn't so how does britain help to hide dirty money if i was an oligarch and i was looking to uh launder money i'd probably hire a team i'd hire a wealth manager and they would suggest various structures into which i could place my wealth you would basically come up with a with a system that would diversify your your money and make it virtually impossible for investigators to to track that money if money can't be tracked no one can prove where it came from or see who owns it now that's where shell companies come in if one of those owns the money it doesn't leave any fingerprints and setting one up in britain is easy you can register a company for as little as 12 pounds in the uk and then use that company to hold a bank account in in latvia or switzerland registering a company at london's company's house takes just 24 hours there are very few checks over a person's identity when you register a company that is changing as we speak and there are supposedly verification procedures being brought in but up until now anybody could uh register a company you didn't need to produce a passport or any personal identification you can register it online from from overseas you don't even have to be the owner of the of the company according to the world bank britain is one of the easiest places anywhere to create a company is the uk the best place to set up a shell company certainly would put the uk in the top five let's say including the overseas territories because it's just so easy to register a company here and in one part of the uk it's even simpler scottish limited partnerships are a type of company that is only available in scotland and they have fewer reporting requirements than the rest of the uk you don't have to file accounts for example if turnover is under a certain amount you can actually say that the company's involved in business but you can provide no record of what that business actually entails but on closer inspection wealth hidden in a shell company still looks like wealth putting money into property is a great way of disguising it and keeping it safe excuse me for a second interesting that's an iceberg it goes down as far as it goes up and it's there wrapping up building at this stage arthur dewan's activist group clamp k runs kleptocrat tours of london showing people mega mansions bought with dirty money number 14 walton street which is over here just behind these olive trees was the subject of the first unexplained wealth order that was brought to court by the nca it's completely unfair that the ordinary british citizen voter taxpayer has to compete for a british house with this foreign stolen money we know there are thousands of properties in this part of london that are owned through these kind of shell companies here's how that can work a house can be bought through an offshore bank account that bank account can be in the name of an offshore shell company that shell company could be owned by a trust somewhere else suddenly the house with all that money in doesn't look like anything at all it's a great trick for hiding dirty money russians who have been accused of corruption or of having links to the kremlin have bought at least 1.5 billion pounds worth of property in britain and they're not the only kleptocrats in town at the same time real estate prices in the capital have risen to eye-watering levels prices are actually rising they're being pushed up by wealthy buyers active in the market it all means increased inequality and a lot of these houses aren't even lived in an estimated 41 billion pounds worth of property stands empty in london alone that's more than the total value of all property in liverpool this is in a city with a housing crisis but owning an empty house isn't illegal which makes seeing when it involves dirty money very hard it's a challenge that britain is finding tough to take on the uk talks a good game the one thing that's lacking at the moment is sufficient backing for the police for the national crime agency and for other agencies that look into this italy the us some other european countries tend to invest a bit more on a sort of you know pound-by-pound basis so to speak in anti-corruption efforts the british government spends just under one billion pounds a year tackling financial crime money laundering costs the economy over 100 times that but weak enforcement isn't the only reason the uk has become a magnet for dirty cash it also has a name for cleaning reputations as well as money for someone who's been involved in money laundering or deals involving tainted cash reputation laundering is useful in one particular way and that is to stymy investigation by for instance journalists or ngos we've seen oligarchs and other foreigners doing this in the uk if an investigative journalist is is looking into you you can strike back a number of public relations and law firms have come to specialize in in helping helping wealthy foreigners to in some cases appear more safely than they might be in reality but since russia's invasion of ukraine the charm offensive has stalled the british government has promised to clamp down on money laundering and has sanctioned individual oligarchs how will britain cope without their money actually not so badly rich russians may spend big while they're here but britain gets less from them than you might think in 2020 foreigners held roughly 13 trillion pounds of british assets russia's share of that was just 0.16 a smaller proportion than that of finland or south korea i think there's a question about how much the money that's coming from russians actually benefits the the broader economy and the potential cost for britain could be much higher well there's a huge amount at stake when it comes to london and dirty money because london is one of the world's biggest financial centres and it trades on being legitimate and on being clean and on being a place where sophisticated investors can come and do business and get financing if the city is tainted with dirty money ultimately that's bad for its reputation britain has had that reputation for years but it's taken the war in ukraine for it to change its tune golden visas have been scrapped and part of a long-delayed economic crime bill has now been passed no criminal or kleptocrat will be able to hide behind a uk shell company ever again as britain vows to clean up its act against all dirty money sanctions against individual oligarchs are starting to bite but it was never just about russians a lot of britain's dirty money is from other parts of the world and if shady russian cash leaves dirty dough from elsewhere could easily take its place will britain be as keen on tightening up on dirty money when it's not russians behind it uk government needs to show that there is political will there to go after these oligarchs not just russian there are plenty oligarchs across the the world and we've simply not seen that over the last 20 years in fact we've actively encouraged that money to these shores and that needs to change if we have any effect at all thanks for watching to read more of the economist coverage of dirty money in london click on the link and don't forget to subscribe