UK property market sees flood of undeclared Russian capital

on Mar 17, 2015
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The UK real estate market has recently seen increasing inflows of undeclared Russian capital as sanctions imposed on Moscow continue to weigh on the country’s economy, Deutsche Bank strategist Robin Winkler said yesterday.

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Winkler claimed in an exclusive interview with the Turkish state-run Anadolu Agency that in the past few months about £1 billion per month of unmonitored capital has been invested in the UK. Winkler said that large amounts of funds have been pouring into the British residential property market, “especially the London housing market. These transactions are not recorded by the tax authorities, they are bringing cash in suitcases”.
According to him, the funds bypass banks as they go through offshore financial transactions, as well as “mailbox companies, etc”. Winkler claims that not all of the money comes from criminal activities but it is difficult to trace the origin of the funds.
The DB strategist said that Russians were showing significant interest in the prime property market in the UK as Western imposed sanctions force many Russians to take their funds out of the country, showing little regard for British regulators. According to Winkler, some of the inflowing capital is “black money”, while some of the cash has remained unrecorded due to technical reasons.
Last year, the rouble halved in value against the dollar as tumbling oil prices, along with sanctions imposed over the conflict in Ukraine hit the country’s economy. Winkler claims that due to the steep devaluation of the Russian currency, “there is a high demand to hold some assets that could be quickly converted [to] other currencies”.
According to experts, about 40 percent of all undeclared funds that flow into the UK are from Russia. A report from Transparency International UK issued earlier this month shows that over 36,000 properties in London have been bought through secret companies located in offshore havens such as the British Virgin Islands and the Isle of Man.

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