iz Truss, the British foreign secretary, has said Russian oligarchs and key supporters
of Vladimir Putin will be targeted by UK sanctions if Russia invades Ukraine, but left
Britain’s existing much-criticised anti-corruption laws largely untouched.
Insisting that the Russian president’s allies would have nowhere to hide their assets
if an invasion went ahead, the Foreign Office, clearly working in lockstep with the
US, threatened to seize the wealth of Putin’s inner political circle and business
backers.
The Biden administration has drawn up a list of potential sanctions targets among
Russian oligarchs and their families, who Washington deems to be in the Kremlin’s
orbit or “complicit in the Kremlin’s destabilising behaviour,” according to a US
official quoted by Reuters news agency.
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“Putin’s cronies will no longer be able to use their spouses or other family members
as proxies to evade sanctions”, the official said. “Sanctions would cut them off from
the international financial system and ensure that they and their family members will
no longer be able to enjoy the perks of parking their money in the west and attending
elite western universities.”
US officials would not provide names, but said sanctions targets were vulnerable
because of their investments and residencies in the west.
Truss, giving a statement to MPs on Monday, also refused to name any individual
Russians at risk of being sanctioned, saying the aim was to create the maximum
anxiety among Putin’s allies.
Truss said the new legislation, which will be in place by 10 February, would be the
“toughest sanction regime against Russia we have ever had”, and would give the UK
“the power to sanction a broader range of individuals and businesses”.
She said the package meant the UK “can target anyone providing strategic support
close to Vladimir Putin”.
Labour criticised the package for failing to speed up the long-promised structural
measures to tackle money laundering in the UK, including measures first announced
by David Cameron in 2014 and 2015.
David Lammy, the shadow foreign secretary, said: “The proposals need to be part of a
coherent policy.
“For years, Labour has raised the alarm about the role of dirty money in keeping
Putin in power. Warning after warning, report after report, the government has been
asleep at the wheel. London is the destination of choice for the world’s kleptocrats.
We are the home to the services and the enablers that help corrupt elites to hide their
ill-gotten wealth.”
Boris Johnson’s efforts to take a leading role in the Ukraine crisis were dealt a blow
when he had to cancel his scheduled call with Putin so that he could answer
questions in the Commons about the Gray report into parties in Downing Street.
No 10 tried to reschedule the call, but Moscow said it was not possible, leaving
Johnson to say he would speak with the Russian president as soon as a time could be
agreed.
Russia described the transatlantic measures as extremely alarming and likely to
damage the business climate in the UK.
The net of those potentially subject to sanctions in the UK is being widened in the
event of an invasion by making Russians and companies supportive of Putin liable to
travel bans and asset freezes. Previously, only individuals regarded as guilty of
destabilising the sovereignty of Ukraine could be sanctioned, although the UK can
and has sanctioned Russians for human rights abuses and corruption.
Currently, 180 Russian individuals and 48 entities are subject to UK sanctions, more
than half linked to the destabilisation of Ukraine.
Truss, who is due in Moscow for talks in the next fortnight but will not be travelling
to Ukraine this week after testing positive for Covid on Monday, told MPs the
proposals meant the UK would be able to act in lockstep with the US. “Whether you
support Russia’s aggressive actions against Ukraine, or you’re of wider significance to
the Kremlin, we will have the power to sanction you,” she said. “Nothing is off the
table and there will be nowhere to hide.
“This will amount to the toughest sanctions regime against Russia we have had in
place yet, and mark the biggest change in our approach since leaving the European
Union.”
The reference to nothing being off the table was designed to show that the
government has not abandoned other structural measures. These include reforms of
Companies House, a register of properties held by overseas citizens and a public
register of beneficial ownership in the British overseas territories – measures that
have been repeatedly promised but held back as a result of opposition from the City
of London. Some of the stiffest opposition is coming from Gulf states and not Russia.
An economic crime bill containing many of the measures looks likely to be delayed, a
move that has infuriated the government’s own anti-corruption tsar, John Penrose.
In the House of Lords on Monday, ministers were challenged about their personal
links to firms operating in tax shelters.
John Heathershaw, co-author of a recent Chatham House report on “Britain’s
kleptocracy problem”, said: “The use of sanctions here appears to be as an ad hoc and
preventive measure – essentially as a form of deterrence. The reason such measures
are necessary is that there is already a great deal of money in the UK from Russia
which has been welcomed by UK banks, estate agents, football clubs and companies
with minimal checks on the sources of wealth and beneficial ownership. The
problems that led to the UK welcoming suspicious Russian wealth are structural
British problems.”