The report from Transparency International — Doors Wide Open — says property is purchased through anonymous shell companies or trusts without undergoing proper due diligence by the professionals involved in the deal.
"The ease with which such anonymous companies or trusts can acquire property and launder money is directly related to the insufficient rules and enforcement practices in attractive markets," the report said.
"The countries analyzed in this study — Australia, Canada, the United Kingdom and the United States — have committed in different forums, such as through the FATF [Financial Action Task Force] and the Group of 20 [G20], to do more to prevent and curb money laundering and terrorist-financing, including by regulating gatekeepers, such as real estate agents, lawyers and accountants, who may act as facilitators in transactions that can enable money laundering," it said.
London — in particular — has come in for severe criticism after hosting a summit on corruption and promising more transparency in property ownership.
In May 2016, the then-UK Prime Minister David Cameron hosted a global anti-corruption summit in London, during which he said: "What we're doing to expose corruption, where the absolute key is having greater transparency and you can see countries committee to exchanging more tax information, ownership information and — in the case of the United Kingdom and others — for the first time having not just a beneficial ownership register — who owns what — but also making that public so that it can be investigated by others."
However, critics have said that — although the UK itself may be cracking down on corruption — many of the Crown dependencies of the United Kingdom — such as Jersey, Guernsey and the Isle of Man — and British Overseas Territories — including Bermuda, the Cayman Islands, the Turks and Caicos Islands, the British Virgin Islands and Gibraltar — remain secretive about the tax affairs of companies registered in their territories.
"It's absolutely true that the UK is one of the leading financial centers for the laundering of corrupt money from overseas, whether through the property market, luxury goods or other sectors," said Rachel Davies, Head of UK Advocacy and Research Transparency International UK in June 2016.
"Our research found that 36,000 London properties are owned through secretive offshore companies with little scrutiny over the source of wealth in those transactions. The UK has been a prime location for stashing away illicitly gained wealth, as anti-money laundering systems are weak and sectors such as UK property represent a safe investment, as well as a place to hide corrupt money," Davies said.