The UK government ineptitude to tackle Russian money laundering
The UK government has been widely criticised for its failure to tackle the problem of Russian money laundering on its own soil. A report by the commons foreign affairs committee found that the UK has become “a safe haven for dirty money” that has financed President Putin’s war in Ukraine. The report said the government’s “unwillingness to bring forward legislation” and “inadequate preparation and foresight” had allowed corrupt wealth to flow into the UK through companies and property. The report also said that the government’s response to Russia’s invasion of Ukraine was slow and ineffective, and that the economic sanctions announced by Prime Minister Boris Johnson were not enough to deter Putin’s aggression.
The UK has been accused of being a “laundromat” for Russian oligarchs and kleptocrats, who use the UK’s legal and financial system to hide their illicitly obtained wealth and evade sanctions. According to Transparency International, more than £4.4bn worth of UK property has been bought with suspicious wealth, and more than 75% of those using this scheme are from Russia and former Soviet states. The UK has also been linked to some of the biggest money laundering scandals in recent history, such as the Danske Bank case, the Troika Laundromat, and the FinCEN files. The UK’s anti-money laundering regime has been described as “fragmented, ineffective, and poorly resourced” by experts and watchdogs.
The government has faced delays and opposition in implementing key reforms, such as the Economic Crime Bill, which was fast-tracked in February 2023 after Russia’s invasion of Ukraine. The bill aims to increase corporate transparency, prevent the use of anonymous companies and agents, and strengthen Unexplained Wealth Orders, which are powers to seize assets from suspected criminals. However, some critics have argued that the bill does not go far enough or fast enough, and that it does not address the fundamental issues of political will, enforcement capacity, and international cooperation.
The UK government has claimed that it is committed to fighting corruption and money laundering, and that it has taken significant steps to improve its anti-money laundering system. It has also said that it will continue to work with its allies and partners to impose sanctions and pressure on Russia for its actions in Ukraine. However, the government’s actions have been questioned by many observers, who have pointed out the lack of concrete results, the influence of Russian money in British politics and society, and the potential risks for the UK’s security and reputation.
What can be done? There is a growing consensus that the UK government needs to take more decisive and effective measures to tackle the problem of Russian money laundering. Some of the key steps that could be taken include:
- Implementing the Economic Crime Bill in full and without further delay.
- Introducing a new register of foreign property owners, which will require overseas entities that own land or property in the UK to declare their beneficial owners or managing officers.
- Increasing resources for law enforcement agencies to investigate and prosecute money laundering crimes.
- Reforming Unexplained Wealth Orders to make them more effective, by expanding their scope to cover trusts and other complex structures, increasing the time available for review, and protecting law enforcement from excessive legal costs.
- Working with international partners to strengthen cooperation on anti-money laundering measures, by sharing information, intelligence, and best practices.
The UK government also needs to demonstrate a stronger commitment to fighting corruption and upholding the rule of law. This includes taking action to address the influence of Russian money in British politics and society, by ensuring transparency, accountability, and integrity in political donations, lobbying activities, media ownership, and cultural institutions.
The failure to tackle Russian money laundering is a serious problem for the UK. It undermines the rule of law, undermines the UK’s security and reputation, and enables Putin to continue his aggression in Ukraine. The UK government must take urgent action to address this problem and to demonstrate its commitment to upholding the values that it claims to represent.
