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After the leak of Pandora papers, UK urges to combat 'dirty cash'

After a huge leak of offshore data revealed that London is the preferred destination for some of the most powerful and wealthy people in the world to hide their money, the Conservative government of Britain is being asked to strengthen its defenses against "dirty cash".

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After the leak of Pandora papers, UK urges to combat 'dirty cash'

The cache of nearly 12 million files, also known as the "Pandora Papers", was published by the International Consortium of Investigative Journalists (ICJ) and its media partners, such as the BBC and Britain's Guardian newspaper.

Particularly London and the U.K. are highlighted in the data dump . The documents show how wealthy people all over the world set up offshore companies to purchase property and avoid taxes.

These types of London offshore accounts were used to benefit foreign individuals such as the Jordanian King Abdullah II and Azerbaijan's President Ilham Aliyev, as well associates of Pakistani Prime Minster Imran Khan. Khan tweeted that Abdullah denied any wrongdoing and that his government would investigate all those mentioned and take the appropriate action if they are found. Aliyev is yet to comment.

Although the purchase is legal under British law the latest revelations reveal the complex and anonymous financial practices wealthy individuals use in order to avoid paying tax. This is far from the daily experience of most people in Britain.

London is the preferred destination for the wealthy and powerful, thanks to its sophisticated ecosystem of businesses that can assist in this process, such as creative wealth management firms and high-end lawyers, and long-established accounting companies.

For years, London's property market has struggled to overcome its reputation as a key player in how wealthy people in the world hide and enhance their wealth. Many prime properties are owned by non-nationals in the city's heart. In recent years, Russian oligarchs were prominent purchasers of London property.

London, one the largest financial centers in the world, was also prominently involved in previous financial data leaks, including the 2016 "Panama Papers", and the subsequent "Paradise Papers".

The U.K. authorities have been encouraging a loose approach to regulation for decades in order to attract talent and foreign capital. Critics claim that this has created a favorable environment for tax avoidance. This can be legal as well as other criminal activities such as money laundering.

Duncan Hames is the policy director of Transparency International U.K. and said that the disclosures should be a "wake-up call" for the government in order to take long-overdue steps to strengthen Britain's protections against money laundering and tax avoidance.

He stated that the leaks showed that there was a system for corrupt elites to buy prime property and live luxurious lifestyles, and one for honest and hard-working people.

He said that Britain's role in global corruption and money laundering has been exposed once again with the same loopholes used to funnel suspicious wealth into the country.

Transparency International U.K. has asked the government to close the loophole that allows offshore financial centers in the U.K., such as the British Virgin Islands or the Cayman Islands, to own property in the country without having to disclose their true owners.

It calls on the government to take action against professionals who help people with illegal wealth hide or move money to the U.K., and to properly fund the National Crime Agency in order to pursue those accused of making their money through corruption and crime.

Rishi Sunak, Treasury chief, said that Britain's tax authorities would inspect the Pandora Papers. He also defended the country’s track record in tax avoidance.

Sunak stated that he doesn't believe it is shameful because of our track record in this area.

He cited the Conservative government's past decade of transparency measures to increase transparency -- who owns it -- and to exchange tax data between tax authorities.

He said, "As you can see from the papers it is a worldwide problem, there is a global dimension it and we need to cooperate with other countries to address this, but that we are determined to do so."

Sunak also stated that there was "always more to be done" when asked about reports that half the Russian money laundering takes place in the U.K.

Opposition parties stated that the government should act immediately on the revelations.

In a tweet, Lisa Nandy, Labour Party spokesperson for foreign affairs, stated that "The tentacles and dark money exposed #PandoraPapers reach deep into the heart of U.K democracy."

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