Anyone involved in a property deal has, until this week, been able to tick boxes to satisfy money laundering regulations.
Photocopy buyer’s passport? Tick. Backside-covering letter from buyer’s bank saying the funds are kosher? Tick. Obvious rogue? E-mail suspicions to internal reporting officer. Tick. Reporting officer ferrets away records in the event of a knock on the door from Her Majesty’s Revenue & Customs or the Serious Fraud Office? Tick.
The release of the Panama Papers this week will mean more than just ticking the answer to this new yes/no question: “Are you aware of any information in the public domain that leads you to believe (insert anyone named on the 11.4m files) is the ultimate buyer?”
Not because the FCA or Serious Fraud Office may pounce. That eventuality remains as likely as an eagle swooping on a nightingale in Berkeley Square.
The new danger will come from a respectable seller being shamed in public for receiving dirty money from a now-exposed tax dodger, or, worse, a plunderer of state funds. Easy to imagine the first paragraph of the letter before action: “Dear (fill in name of agent or lawyer), our client has suffered considerable reputational damage due to your professional negligence in failing to carry out the
necessary checks…”
PS: The release of the Panama Papers should give respectable funds cause to think again about “offshoring” to avoid capital gains tax. The fact is that the majority of these structures are founded on a lie: that “management and control” of the fund lies in a tax haven. Popping over for the occasional board meeting is a hollow fiction.
The question now is this: is the saving in CGT worth the reputational and (increasing) legislative risk?
Not yet the bad old days
To lunch at Wiltons this week with the boss of one of the UK’s most highly regarded property companies. He is a man not only wise enough to know that the party is over, but to know enough not to panic.
“There are far fewer forced sellers this time around,” he said over a glass of fizz, referring back to the 2007-08 crash that destroyed the career of many a banker. “This time around there is far less bank debt and, so far, fewer banks are forcing sales. This time around the sellers can sit on their hands and wait.”
Bonuses: the flexible friend
Savills boss Jeremy Helsby’s total remuneration in 2015 was £2.3m, according to the annual report published this week. About £300,000 basic and £2m in bonuses. Last year’s basic wage bill for the 30,700 staff was £425m. Bonuses and commissions added £345m. That’s 80% on top, up from 72% last year.
Good news for Savills, which can shrink the wage bill by the odd hundred million should this year prove to be more difficult.
Good news for staff, of course – at least for those who have not committed the mortal sin of entering into financial commitments that anticipate the same level of bonus in 2016.
