Ukraine crisis: Boris Johnson’s meek sanctions against Russia highlight Britain’s growing problem with kleptocratic wealth – Martyn McLaughlin

The rapidly deteriorating security situation in Ukraine requires a brisk and robust response, but there are already fears that the sanctions being levied against Russia by Western leaders will not be enough.

While the German chancellor, Olaf Scholz, has signalled that he is set to pull the plug on the Nord Stream 2 pipeline, others in the continent are less assertive, with the likes of Italy and Austria favouring a more incrementalist approach, and allies of Vladimir Putin like Hungary’s Victor Orban still talking of diplomacy.

Amid such division, is it too much to expect Britain to show some moral leadership in face of the invasion of a European democracy? If the Prime Minister’s announcement to the Commons on Tuesday afternoon is any guide, the answer is a resounding yes.

Even by Mr Johnson’s standards for bluster, the idea that the UK sanctions against Russia are hard-hitting plumbs new depths. By focusing on five banks, its scope and definition is lamentably narrow, and all three of the Russian high net-worth individuals targeted – Gennady Timchenko, and Igor and Boris Rotenberg – have been subject to US sanctions for several years.

Mr Johnson said the action announced represents the “first barrage” of what Britain is prepared to do. He might as well have fired a party popper for all that it will unsettle Putin.

The Prime Minister and his party have long faced accusations that they are reluctant to bring an end to Britain’s ignominious role as a laundromat for Russian money and reputations. Such accusations have now been given added credence.

The crisis in Ukraine has led to furrowed brows in Whitehall and tough rhetoric, but when it comes to taking action, our government’s tepid response makes a mockery of its promise to stand shoulder to shoulder with Kyiv.

Prime Minister Boris Johnson announces limited sanctions against Russia at the Commons on Tuesday. Picture: AFP via Getty

The inward flow of dirty Russian money into London’s engorged property market is one of the reasons that Putin has been able to flex Russia’s military muscles and act with such impunity.

Our toleration of Kremlin-backed oligarchs is no accident. It is the product of a system of professional services, set up to enable and protect the super-wealthy, populated by phalanxes of lawyers, estate agents, advisors, accountants, and public relations practitioners. As long as the money keeps pouring in, hard questions are parked.

That is why when Russia invaded Crimea in 2014, a photographer captured an insightful image of a document being carried by a National Security Council official en route to Downing Street. Any plans by the EU to take action against Moscow, the document noted, should not “close London’s financial centre to Russians”.

Despite the fact that Britain’s dalliance with kleptocratic wealth has risen up the political agenda since then, the safeguarding of the London economy continues to be the priority.

Four years ago in the aftermath of the Salisbury poisonings, Ben Wallace, the then security minister, stressed that more was being done to scrutinise the wealth of Russians investing tens of billions of pounds in London.

The greatest barrier to action, Mr Wallace explained at the time, was Britain’s membership of the EU. Once that had ended, he said, it would be in a position to impose sanctions unilaterally. It was an absurd statement then, and even more so now.

Mr Wallace, now riding high as Defence Secretary, has been widely praised for his robust response to the Ukraine crisis, but the sanctions announced fall some way short of such tubthumping.

The grim truth is that the system of checks that should be in place to crack down on bad actors and assess the origins of the riches pouring into London and further afield remain so meek they may as well be non-existent.

The Office of Financial Sanctions Implementation, hailed as a progressive enforcement agency, has levied just six fines in the past six years, with just one being issued in the 12 months to the end of March 2021, a timescale in which it received reports of 132 potential breaches.

Why has Russia invaded Ukraine and what does President Vladimir Putin want?

The National Crime Agency, supposedly the first line of Britain’s defence against organised crime and money laundering, is pitifully resourced, capable of mounting only modest prosecutions.

Unexplained wealth orders, hailed as a transformative legislative breakthrough in the battle against dirty money, are utilised so infrequently that they remain an anomaly.

The recommendations laid out in ‘Moscow’s Gold’, a 2018 report by the Foreign Affairs Committee which made explicit the repercussions of corrupt assets being laundered in London, remain little more than aspirations.

A review into the investors who benefited from the so-called ‘golden visa’ scheme between 2008 and 2015, launched in the wake of the Salisbury atrocity, has yet to be published.

The date has yet to be set for the introduction of the much-lauded Economic Crime Bill, and a new register of beneficial owners of overseas entities that own or buy property in the UK has been lost in the cogs of Whitehall, despite the fact it was first promised as long ago as 2016.

Companies House, which is perhaps the most ignominious example of the lot, continues to allow the incorporation of shell companies and limited partnerships which help funnel suspicious funds around the world, and turns a blind eye to obviously bogus filings. That is why, for instance, one ‘Adolf Tooth Fairy Hitler’, was until recently registered as the secretary of a stonemasonry enterprise in West Yorkshire.

At the risk of stating the obvious, all of this is deeply humiliating, and it explains why officials in Washington and Brussels are growing increasingly dismayed and alarmed at how ‘Londongrad’ and its love affair with Russian money is undermining its own security efforts.

What hope is there of sanctions countering Russian aggression abroad when the UK has turned a blind eye to Russian corruption at home? Mr Johnson may say he is taking action, but it is a bluff. Until that changes, the prospect of a coherent strategy to counter Putin’s worst instincts will remain elusive.

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