The UK, which is hosting a two-day summit on fighting corruption, has tightened the screws on potentially dirty money, the government announced today.

"Beneficial ownershp" is rapidly becoming one of the most widely-referenced themes in global financial compliance today, as a number of fresh developments indicate.

The UK government is moving to force foreign-owned companies that own UK property to identify the beneficial owners, as London hosts a two-day international conference of senior policymakers on fighting corruption. 

The announcement comes shortly after a second wave of data, based on leaked Panama-based accounts, was issued by the Washington DC-based International Consortium of Investigative Journalists at the start of this week. A few weeks ago, it emerged that UK prime minister David Cameron’s late father had had a Panama-based account, although no wrongdoing was asserted. The matter has been embarrassing for Cameron, however, because he has championed the notion of public registers of beneficial ownership as a way to kill dirty money. The Panama Papers saga has also led to the resignation of the Icelandic prime minister and caused embarrassment for Australian prime minister Malcolm Turnbull, although no misconduct is claimed in his case.

The conference on corruption has already caused political embarrassment for the UK government after Cameron was recorded talking about how countries such as Nigeria are “fantastically corrupt”.

Foreign ownership of UK property has also become a political hot potato not just because of beneficial ownership opacity, but because it has been blamed, not necessarily justly, for driving up London property prices.

In a statement, the government today said: “Any foreign company that wants to buy UK property or bid for central government contracts here will have to join a new public register of beneficial ownership information before they can do so. This will be the first register of its kind anywhere in the world. Crucially, it will include companies who already own property in the UK, not just those wishing to buy. Foreign companies own around 100,000 properties in England and Wales. Over 44,000 of these are in London.”

“The new register for foreign companies will mean corrupt individuals and countries will no longer be able to move, launder and hide illicit funds through London’s property market, and will not benefit from our public funds,” it continued, adding that the summit on corruption will also see Nigeria, Afghanistan, Italy, Jordan and Argentina commit to taking the initial step towards similar action.

“A global problem needs a truly global solution. It needs an unprecedented, courageous commitment from world leaders to stand united, to speak into the silence, and to demand change,” Cameron said.

Among other “milestones”, the statement said, France, the Netherlands, Nigeria and Afghanistan will commit to launch their own public registers of true company ownership, while Australia, New Zealand, Jordan, Indonesia, Ireland and Georgia will agree to take the initial steps towards making similar arrangements. The UK will launch its own fully public register next month. 

A total of 40 jurisdictions, including a number of Overseas Territories and Crown Dependencies, have signed a “ground-breaking international deal” to automatically share their beneficial ownership registers with other countries. 

“If these companies that own the property are ultimately held by a trust, the company may only need to note the trustee on the register. I suspect there will be a clamour for the rules to require settlors, protectors and the ultimate beneficiaries of those trusts to be disclosed,” Jason Collins, head of tax, at Pinsent Masons, the international law firm, said.

“A lot of high net worth individuals will think that is pushing transparency too far at the expense of their privacy.  Most of these people will have a very legitimate reason for wishing to maintain privacy.  Public registers may just promote vigilantism and voyeurism.  Those with something to hide will probably find ways to beat the system anyway – there do not seem to be many ideas on how resources will be deployed to make sure the information on the registers is accurate,” Collins said.

Australia
Separately, it was reported that Australian prime minster Malcolm Turnbull, has been named in the Panama Papers as a former director of a British Virgin Islands company set up and administered by law firm Mossack Fonseca to exploit a Siberian gold prospect.

Mr Turnbull and former New South Wales Premier Neville Wran on October 29 1993 joined the board of Star Mining NL, the Australian listed company which hoped to develop a $20 billion Siberian gold mine called Sukhoi Log, according to the Australian Financial Review.

In November last year, when Turnbull’s offshore affair emerged, he had recently toppled former PM Tony Abbott – see this comment here.

The Panama Papers saga has seen the downfall of Icelandic prime minister Sigmundur David Gunnlaugsson, and, by an ironic twist, a senior Chilean figure for the global dirty money watchdog, Transparency International. (For more on those stories, see here.)

The notion of using public registers of beneficial ownership has come in for criticism. An Australia-based academic has recently argued that these registers, while better than nothing, aren't necessarily the most effective ways to expose illicit money. (See here.) There remain concerns that such registers could put wealthy people, who have legitimate assets, at risk from kidnpappers, blackmailers and other assailants.