UK under pressure to curb cascade of illicit Russian cash
05 Aug 2020

On his way to a high-level meeting in Downing Street, deputy national security advisor Hugh Powell held to his side top-secret papers setting out the Government’s response to Russia’s annexation of Crimea.

But a long-lens camera trained on officials walking in and out of Number 10  was enough to catch the controversial direction: the UK should not “close London’s financial centre to Russians”.

Six years later, tensions persist between the capital’s open embrace of investment from Russia and the wider desire to limit the state’s reach and punish its transgressions.

They re-surfaced last month when the parliamentary Intelligence and Security Committee published its long-awaited Russia Report into Russia’s influence in the UK.

It added to long-held concerns that the UK’s welcoming markets have provided cover for kleptocrats and criminals to launder money from Russia, and a platform for Russian oligarchs to gain political and social influence.

“This level of integration – in ‘Londongrad’ in particular – means that any measures now being taken by the Government are not preventative but rather constitute damage limitation,” it warned.

In the fight to curb Russian influence and money-laundering, campaigners are now turning up the heat on their powerful “enablers” – lawyers, accountants, estate agents and public relations professionals.

They have, wittingly or unwittingly, helped “in the extension of Russian influence which is often linked to promoting the nefarious interests of the Russian sate”, according to the Russia Report, which calls for tougher security laws and sanctions.

Transparency International laid bare the role played by ‘enablers’ in money-laundering in a report last year, which found evidence of 86 banks, 81 law firms and 62 accountancy firms that had, unwittingly or otherwise, helped move suspicious or corrupt wealth from around the world into properties, jets, yachts, other assets and shell companies.

Firms ranged from those who had been deceived by their clients, to those that courted high-risk clients due to their wealth, to those that knowingly helped with money-laundering.

In one of the most prominent cases, in 2017, Deutsche Bank was fined $630m by regulators in the US and the UK over a $10bn so-called “mirror trade” scheme, in which it bought Russian stocks on behalf of clients and then shortly after sold them through its London branch, cleared through New York.

Deutsche Bank agreed with regulators that the scheme “could have facilitated capital flight, tax evasion or other potentially illegal objectives”, although it was “unable to identify the actual purpose behind this scheme”, according to reports at the time.

TI’s analysis found that clients at 72 UK banks and branches had received more then £570m in suspicious funds connected to the Former Soviet Union, more than a third of which was paid into just five UK bank accounts.

It argues that while there are strict anti-money laundering rules, conflicts of interest between regulators and trade bodies mean there is little oversight of how well they are being followed within industries, while criminal enforcement is also low.

Ben Cowdock, co-author of the report, says change will be a “slow burner”, adding: “The culture in a lot of these private sector organisations is not going to change overnight. Especially when you look at companies that go out of their way to target high-risk organisations.”

Even then, he adds, the “private sector is so broad and so many people are offering services that if you really want to launder money into the UK, then you’re going to be able to find someone willing to do it”.

Anti-corruption campaigner Roman Borisovich, formerly an investment banker, is concerned that little has changed since his 2015 Channel 4 documentary From Russia with Cash, in which UK estate agents sought his business despite his posing as a corrupt official who had stolen money. Borisovich is co-founder of the ‘kleptocracy tours’ in which sightseers are shown lavish London properties snapped up by corrupt officials.

“We need to see some more court cases,” he says. “Money is attracted by the fact it can come in anonymously, buy property and enjoy itself. The UK has created an atmosphere – a bubble of welcoming tainted money.”

Data suggests professionals are not turning a blind eye. The Solicitors’ Regulation Authority says it has taken 94 solicitors and firms to the Solicitors Disciplinary Tribunal for money-laundering cases since 2015, 25 of which have been struck off, and 14 suspended.

Estate agents alerted authorities to potential corruption or terrorist financing 1,345 times over the last two years, according to National Crime Agency data.

By Rachel Millard, The Telegraph, 4 August 2020

Read more at The Telegraph

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