Russia | The Independent Business News

Britain is the ‘weakest link’ in efforts to freeze the wealth of Russian oligarchs, campaigners have warned, as it appears Putin’s cronies may be able to dodge sanctions and continue dealing with British companies.

Anti-corruption campaigners said it was becoming increasingly clear that the UK’s sanctions regime was “all bluster and no teeth”, despite claims by Foreign Secretary Liz Truss that the oligarchs would have “no place left to hide”.

It came as the government confirmed The Independent that there was currently no new funding allocated for a crackdown on abuse of UK-registered front companies, or for a new “kleptocracy unit” at the National Crime Agency. A small number of officers have been moved from other duties to work in the unit and plans are moving “in step”, the Home Office said.

Without more resources, authorities will not be able to prevent widespread abuse of Companies House to incorporate entities used for money laundering, said financial crime expert Graham Barrow.

There is a lag between announcing the crackdown and “doing the job right”, he said. “Meanwhile, criminals intent on abusing the corporate house will find other ways.”

This week, the foreign minister launched an attempt to push emergency legislation through parliament that would allow more members of Vladimir Putin’s inner circle to be sanctioned and more of their real estate, yachts and financial assets to be frozen.

Despite London’s reputation as a hub for Russian money, only 16 entities have been named by the British government since the start of the invasion of Ukraine last week, compared to 490 sanctioned by the EU, 371 by Switzerland and 118 by the United States.

Among those sanctioned by the UK are Igor Shuvalov, the former Russian deputy prime minister, and billionaire Alisher Usmanov, who were added to the list on Thursday.

While ordinary Russian citizens are expected to be hit hard by Western sanctions, which threaten to cause a banking crisis and economic turmoil, ultra-wealthy oligarchs are reportedly making efforts to quickly move their assets out of reach of Western authorities.

Experts have warned that with each passing day, wealthy Russians have new chances to hide their wealth, blunting the West’s ability to strike at Mr Putin’s political base.

The UK has come under intense pressure in recent days to toughen its stance against Kremlin-linked Russian money. Billions of pounds of Russian wealth have been held in London or via companies registered in offshore tax havens over which the UK ultimately has control.

The small number of Russians who are subject to British sanctions can escape it. Loopholes in UK sanctions laws mean it is legal for sanctioned Russian oligarchs to buy luxury property or have their yacht repaired in the UK, as long as they use an account registered in a country that did not sanction them, campaign group Spotlight on Corruption said. .

However, legal experts argued that the perceived loophole would not be exploited in practice.

Jonathan Fisher QC of Bright Line Law said: ‘Whether it’s technically legal or not doesn’t matter. In practice, this will not happen.

“The reality is that if you want to buy property in the UK you need a UK solicitor and the solicitor’s business would be subject to the penalty.”

What is not disputed is that sanctions breach prosecutions in the UK are extremely rare. The Office for Financial Sanctions Implementation (OFSI) has only issued 6 fines in the last 5 years. No criminal case for violation of sanctions has been initiated for 12 years.

The reforms proposed by Ms Truss this week, first reported by the Financial Times, would not address these weaknesses. The Minister of Foreign Affairs wants to speed up the process of sanctioning people with close ties to Mr. Putin and reduce the threshold of proof to prove these ties.

“Sanctions legislation needs an appropriate overhaul to address known shortcomings, and law enforcement and OFSI need a massive increase in resources,” said Sue Hawley, executive director of Spotlight. on Corruption.

“Without this, the UK will remain the weak link in the chain.”

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This notice was published: 2022-03-04 18:49:43

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