The Government responded robustly to the attack on Sergei Skripal and his daughter, Yulia, in Salisbury in March 2018. But despite the strong rhetoric, President Putin and his allies have been able to continue “business as usual” by hiding and laundering their corrupt assets in London. These assets, on which the Kremlin can call at any time, both directly and indirectly support President Putin’s campaign to subvert the international rules-based system, undermine our allies, and erode the mutually-reinforcing international networks that support UK foreign policy.
This has clear implications for our national security. Turning a blind eye to London’s role in hiding the proceeds of Kremlin-connected corruption risks signalling that the UK is not serious about confronting the full spectrum of President Putin’s offensive measures. We therefore call on the Government to sanction more Kremlin-connected individuals, including by using the powers outlined in the Sanctions and Anti-Money Laundering Bill, once available, to sanction individuals responsible for gross human rights violations. We also ask the Government to work with the EU, US and G7 to tighten loopholes in the sanctions regime that allow Russia to issue new sovereign debt with the assistance of sanctioned entities such as VTB Bank.
The Government must show stronger political leadership in ending the flow of dirty money into the UK. This should include allocating sufficient resources and capacity to the relevant law enforcement agencies, and improving mechanisms for information-sharing. The scale of the problem and its implications for the UK’s security also demand a greater response from the Overseas Territories and Crown Dependencies, through which some of this money enters the UK. We therefore welcome the Government’s commitment to assist the Overseas Territories in establishing publicly accessible registers of beneficial ownership. We urge the Government to do everything in its power to enable the Overseas Territories to put these registers in place voluntarily, before the end of 2020, and to set out clear plans for supporting the economies of the Overseas Territories as they do so.
The UK’s role as a financial centre and G7 member gives it significant leverage in seeking to counter the Kremlin’s aggressive behaviour. But reacting in an ad hoc way to the Kremlin’s behaviour has led to a disjointed approach. The UK must set out a coherent and pro-active strategy on Russia, led by the Foreign and Commonwealth Office and co-ordinated across the whole of Government, that clearly links together the diplomatic, military and financial tools that the UK can use to counter Russian state aggression.
Published: 21 May 2018