Oligarchs launder dirty cash in UK courts
14 Jan 2020

Corrupt Russian oligarchs are bringing lawsuits in English courts to launder hundreds of millions of pounds in dirty money, research reveals.

British lawyers and academics claim that there is “ample evidence” that they have attempted to manipulate the UK judicial system to wash ill-gotten gains and settle old scores. They accuse law firms and other City professionals of being “pin-striped enablers” of Russian manipulation.

“Commercial disputes in UK courts often involved Russian individuals the source of whose wealth is dubious to say the least,” said Andrew Foxall, author of a report published today by the Henry Jackson Society, a foreign policy think tank.

“And these disputes provide potential cover for a range of activities many of which have taken place elsewhere in Europe, including money laundering,” said Mr Foxall, who wrote the report, Russian Kleptocracy and the Rule of Law: How the Kremlin Undermines European Judicial Systems.

Experts say that dirty money can be laundered when oligarchs agree to sue each other in the English courts with the parment of damages being used to launder their funds. They can also arrange to bring cases against themselves using sham companies.

Mr Foxall, a former academic at Oxford University and Queen’s University Belfast, said: “Russian oligarchs may have used English courts to launder tens, possibly hundreds, of millions of pounds through various scams.”

Ben Emmerson, QC, who acted for Marina Litvinenko in the inquiry into the murder of her husband Alexander by Russian agents, said: “Many of the companies involved in [commercial] litigation nowadays are either Russian state owned, or owned by proxies of the Kremlin.”

The report supports concerns that have been building for several years in the legal profession that City lawyers “are witting or unwitting participants in this type of scam”. British lawyers and other professionals are obliged to make suspicious activity reports to the National Crime Agency if they suspect their clients could be involved in attempts to launder funds.

But, Mr Foxall said, “it is questionable whether they are taking their obligations as seriously as they might”.

The latest figures from the NCA showed that in 2018-19, lawyers filed 2,441 suspicious activity reports. That was 0.5 per cent of the total reports, with banks making nearly 384,000.

The NCA has complained that “the number of reports from lawyers and accountants remains low”.

An updated EU law to tackle money laundering came into effect yesterday which means that law firms will “have to make changes to the way they work to help keep the proceeds of crime out of legal services”.

Last October, the Solicitors Regulation Authority revealed that a fifth of law firms in England and Wales had failed to comply with existing money-laundering rules. The watchdog said yesterday that firms will now be under a duty to collect proof of registration for business entities such as trusts and companies and to blow the whistle on any suspicions around those entities.

Simon Davis, the president of the Law Society, which represents solictiors in England and Wales, said: “The UK has one of the strictest anti-money-laundering regimes in the world. Solicitors are highly regulated and — in line with their obligations — are all too aware of the dangers posed by international criminal gangs. They remain vigilant across all aspects of practice for warning signs of money laundering.”

Jackie van Haersolte-van Hof, director general of the London Court of International Arbitration, said the body had a strict set of rules that were “robust procedures” that imposed “compliance with regulatory guidelines including in relation to sanctions and anti-money laundering”.

Case study: Dubious charge earns rebuke

The Henry Jackson Society report highlights what it claims is the use by Russian officials of dubious criminal charges to influence rulings in Britain.

It focuses on a 2015 case when a Russian businessman brought two claims in the London Court of International Arbitration (LCIA).

By Jonathan Ames, The Times, 11 January 2020

Read more at The Times

RiskScreen: Eliminating Financial Crime with Smart Technology

Count this content towards your CPD minutes, by signing up to our CPD Wallet