U.K. Plans Public Register of Property Owners

LONDON—U.K. Prime Minister David Cameron said Thursday he is clamping down on money laundering, and called on the U.S. and China to follow suit.

Mr. Cameron announced the creation of a public register showing the true owners of property and companies in the U.K. during an anticorruption conference in London. The conference was attended by U.S. Secretary of State John Kerry and representatives of more than 50 countries.

U.K. homeowners currently can remain anonymous to authorities through companies based in offshore finance centers like the British Virgin Islands. Criminals and corrupt politicians use the anonymity to launder ill-gotten money, Mr. Cameron said.

"We need to clean up our property market right here in London," Mr. Cameron said. Efforts to raise transparency standards to stop the corrupt from hiding stolen cash in property should be followed by the U.S., China and all other countries, he said.

Details on when the register would be implemented or penalties for not adhering to the rules haven't yet been announced.

Tackling money laundering in real estate might be easier said than done, lawyers said. Creating a register of so- called beneficial owners behind offshore companies "is part of the fight," said Suzie Ogilvie, global head of financial crime and sanctions at law firm Freshfields Bruckhaus Deringer LLP.

Part of the problem: criminals in some jurisdictions aren't required to list themselves as the beneficial owners of companies. In some countries, such as Cyprus, they can nominate others to take on the title.

"Until you have a common agreement across the world to prevent the use of nominee beneficial owners, the issues won't go away," Ms. Ogilvie said.

The U.K.'s main opposition Labour Party welcomed the measures but said it could be difficult to enforce if jurisdictions refuse to cooperate.

"They could just produce a toothless tiger," said Edward Craft, partner at law firm Wedlake Bell LLP. If those breaking the law can't be prosecuted, "it won't do anything but name and shame."

The effort to crack down on criminal activity in real estate comes after years of booming property markets in major cities around the world. After the financial crisis, overseas buyers from countries including Russia and China sought the perceived safety of high-end property in cities like London and New York.

Demand has slowed this year as buyers pulled back amid stock-market turmoil and low oil prices. But concerns that some of the flood of cash may have had criminal origins already had spurred a crackdown on secretive corporate ownership.

The U.S.Treasury is testing a program aimed at revealing owners behind shell companies buying high-value property in New York and Miami. From March through August, home buyers behind companies that use cash to buy homes must be identified.

"Governments have identified a problem with overseas buyers storing wealth in property," said Matthew Pointon, property economist at Capital Economics in New York. The U.K. measures announced Thursday signal "the direction the world is going," he said.

The U.K. government said about 100,000 properties in England and Wales were owned by foreign companies, with more than 44,000 of those in London.

In the U.K., the private sector is largely responsible for flagging suspicious deals to authorities. The U.K. government also said Thursday it was considering changes to the law that would lead to companies being prosecuted for failing to prevent fraud and money laundering carried out on their watch.

"It's no use having laws against corruption if lawyers, accountants and estate agents can find ways around those laws," Mr. Cameron said.

"You just have to work with all these countries to persuade them, and in the end, if we all raise the bar, it will be more effective," Mr. Cameron added. "I am committed to that and the United States should certainly be included in that."

Write to Art Patnaude at art.patnaude@wsj.com, Alexis Flynn at alexis.flynn@wsj.com and Simon Clark at simon.clark@wsj.com

  (END) Dow Jones Newswires
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