UK finally confronts the Russian cash cow

From sanctions against oligarchs to an end to “golden visas”, the Russian invasion of Ukraine has pushed the UK to tackle a system that has for decades courted Russian money — sometimes of dubious origin. 

“It’s the end of an era,” Dominic Grieve, a lawyer and former Conservative MP who served as attorney general under prime minister David Cameron, told AFP. 

Grieve denounced London’s complacency over the origin of huge sums of Russian money invested in the country in a 2020 report.

Anti-money-laundering activists have highlighted the role of London’s vast financial sector and its armies of lawyers, accountants and real estate agents in bringing Russian dirty money into the system.   

They also accused the Conservative government of hypocrisy and a lack of urgency in tackling the issue, with hostilities in Ukraine finally forcing it to take action. 

The influx of wealthy Russian citizens into the UK increased from 2008 due to the introduction of so-called “golden visas”, which were granted in exchange for investments worth millions of pounds, explained Grieve. 

“As a consequence, London and the United Kingdom more generally became an absolute pole of attraction for Russian businessmen, who have made a great deal of money out of the disintegration of the old Soviet Union, often, one has to say, in some very dubious circumstances.”

– ‘More to be done’ –

They found the UK “a pleasant place to do business, a pleasant place to invest, and in many cases, a very pleasant place to live and indeed, educate their children,” he added.

“It was obvious that many of these people were keeping very close links with the Russian state.”

The anti-corruption pressure group Transparency International has identified £1.5 billion (€1.8 billion) of London property owned by Russians accused of corruption or links to the Kremlin. 

It also flagged up more than 2,000 companies registered in the UK or its overseas territories that have been used in money laundering or corruption cases involving £82 billion of Russian money.

Transparency International pointed to the complicity — unwitting or not — of British banks, law firms and accounting companies. 

London announced last month that it would stop issuing “golden visas”, and extended the list of people targeted by sanctions to around 15 Russians close to Vladimir Putin’s government.

Prime Minister Boris Johnson pledged on Monday that there was “more to be done” on individual sanctions.

And a bill introduced in parliament is also aimed at preventing the use of property to launder money by forcing the disclosure of the owner’s true identity, meaning they will no longer be able to “hide” behind a company.

– Serving the oligarchs –

The City of London is going to be “hit hard” by the asset freezes and travel bans on oligarchs, but will endure as “the UK attracts money investments from all over the world and people who want to invest,” said Grieve. 

The UK financial sector was already subject to laws designed to control the flow of dirty money, but these have been poorly enforced, partly because of a lack of resources in government financial crime departments.

“The new package of measures have the potential to be very effective”, especially in “shining a light on who owns almost 90,000 properties across the UK held by secretive overseas companies”, according to Ben Cowdock, head of investigations at Transparency International in the UK. 

But the measures need to be “sufficiently resourced for effective implementation”, he added.

While the fortunes invested in the UK come largely from Russia, others also come from Ukraine, China and Nigeria, among others, according to a 2019 Transparency International report.

“Britain has since the end of the Empire dedicated itself to servicing the world’s wealthiest people and corporations, and if some of them are Russian then great,” said Oliver Bullough, the author of a book on the subject. 

“If they’re from somewhere else, also great,” added Bullough, whose book, “Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals” comes out next week.

Despite recent action, “there doesn’t seem to be a realisation that we shouldn’t be having money from any oligarchs,” he added. 

“There isn’t really any enforcement. So at the moment, it’s very disappointing.”