A report by the British Foreign Affairs Committee says Russian “dirty money” laundered through London is damaging Britain, Reuters news agency reported today.
Ever since the poisoning of Sergei Skripal, former Russian military intelligence officer who acted as a double agent for the United Kingdom’s intelligence services, the relations between the U.K. and Russia have been exceptionally tense. Britain has blamed the attack, which happened on British soil, on Kremlin, but Moscow has repeatedly denied any involvement in the incident.
Skripal’s poisoning seems to have renewed the scrutiny of dirty Russian money and its ubiquitous presence in the British capital.
On March 24 this year, the Irish Times published a special report, detailing the rise of Russian oligarchy, as well as its financial exodus to London. The British capital, which aims to be the financial capital of the world, has become the favorite destination of Russian oligarchs looking to flaunt their wealth.
“You could either invest in New York or you could invest in London. So they were doing everything they could to ensure that people came to London, and that meant no questions asked,” former BBC central European correspondent Misha Glenny told the Irish Times.
Roman Borisovich, the founder of ClampK, the Committee for Legislation Against Money laundering in Properties by Kleptocrats, told the Irish Times London’s that Russian oligarchs are not to be mistaken with businessmen. They have, according to Borisovich, made their wealth from transactions with the Russian government.
Their money, extracted from Russia, usually leaves the country to be laundered in Cyprus, goes through a few offshore companies on to the British Virgin Islands, and then arrives in London – where it is then invested in real estate.
Between 2008 and 2015, for example, about 3,000 high net-worth individuals took advantage of the so-called Tier 1 Investment Scheme established by Gordon Brown, former Prime Minister of the United Kingdom, the Irish Times noted. This scheme enabled wealthy individuals to get temporary residence and then apply for permanent residence within two to five years, providing they invested between two and ten million Pound Sterling in the United Kingdom.
The Skripal poisoning seems to have made British lawmakers more wary of Russian oligarch presence in London, and the newly released report states that Russian money was undermining Britain’s criticism of Russia and supporting a campaign by President Vladimir Putin, designed to “subvert the international rules-based system.”
“The scale of damage that this ‘dirty money’ can do to UK foreign policy interests dwarfs the benefit of Russian transactions in the City,” Foreign Affairs Committee chairman Tom Tugendhat told Reuters.
The committee also said that there is “no excuse for the UK to turn a blind eye as President Putin’s kleptocrats and human rights abusers use money laundered through London to corrupt our friends, weaken our alliances, and erode faith in our institutions.”
Britain should, the committee further asserted, work with its allies to make it more difficult for Russia to issue sovereign bonds.