UK faces calls to tackle ‘dirty money’ as it targets Kremlin-linked oligarchs with sanctions

British Foreign Secretary Liz Truss on Monday faced calls to do more to tackle “dirty money” flowing into Britain as she announced plans to tighten sanctions regime against Russian oligarchs with links to the Kremlin.

The legislation, which comes into force next week, will “significantly strengthen” Britain’s ability to deal with Russia’s “aggressive action against Ukraine”, Truss said. The move was part of “an unprecedented package of coordinated sanctions” that Britain was preparing with its allies, she added.

Officials said the new powers would allow Britain to act in “lock steps with the United States and other allies to freeze assets and ban travel” in the event that Russia’s forces invade Ukraine.

Truss said the extension of the sanctions regime would allow Britain to target “any individual and company of economic or strategic importance to the Kremlin”.

Tom Tugendhat, the Conservative MP and chairman of the Foreign Affairs Committee, welcomed the announcement, but pointed out that his committee had first called for a tightening of the sanctions regime against Russia four years ago. “The strongest thing we can do to defend Ukraine is to defend ourselves against dirt and corruption in our city.”

In 2018, the government estimated at £ 100 billion. of “dirty money” had flowed into Britain, from countries including Russia. Two years later, the Parliamentary Intelligence and Security Committee said the City of London provided “ideal mechanisms” for recycling illegal funding, adding that it had become a “laundry” for offshore wealth.

David Lammy, Labour’s shadow foreign minister, supported the move to tighten sanctions, but accused successive conservative-led governments of failing to act earlier. “For too long, our defenses have failed at home while the government looks abroad… London is the preferred destination for the world’s kleptocrats.”

Dmitry Peskov, a spokesman for Russian President Vladimir Putin, said Britain’s action was an “overt attack on business”.

Truss also said the government would revive a long-delayed law on economic crime – designed to crack down on the flow of dirty money to Britain – before the end of the year. Tory MPs, including the government’s anti-corruption chief John Penrose, had last week criticized Boris Johnson, the British prime minister, for delays in passing legislation.

The bill is expected to include a crucial reform of Companies House to crack down on the abuse of shell companies as well as powers to expose the real owners of offshore companies that own UK property, and tougher powers to challenge unexplained wealth.

Truss also said that before April 5, the government would publish a long-delayed review of how more than 700 wealthy Russians who secured so-called Tier 1 visas that allowed them to live in the UK had acquired their wealth. The probe was ordered in 2018 in the wake of the nerve agent attack in Salisbury, which was aimed at a former Russian intelligence officer for whom Britain has blamed Moscow.

British officials said the new sanctions powers were necessary as ministers under previous legislation had only been able to target those linked to the destabilization of Ukraine.

But analysts and lawyers rejected that claim. Tom Keatinge, an expert in economics and security at the Royal United Services Institute think tank, pointed to the global anti-corruption sanctions adopted last year.

“It has taken the brink of war in Europe for the government to think of sweeping the Augian stable of dirty Russian money out of London when it could have done so in the past through sanctions, unexplained property orders or other measures,” he said.

During a UWO, investigators from the National Crime Agency can freeze assets and seize property in the UK, unless the subjects can explain how they can legally afford the purchases.

Neill Blundell, head of the company’s crime and investigation team at Macfarlanes, said Britain’s existing sanctions legislation against Russia was not as “narrow as it is portrayed”.

Further reporting by Polina Ivanova in Moscow

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