Russian money hidden in British assets and laundered through City of London financial institutions damages the UK government’s efforts to take a tough stance against Moscow’s aggressive foreign policy, a committee of British lawmakers said yesterday.
Britain’s financial center has been a major beneficiary of the massive flight of Russian cash since the 1991 fall of the Soviet Union, and London remains the Western capital of choice for oligarchs and Russian officials who flaunt their wealth across Europe.
However, the UK has led an international diplomatic backlash against Russia following the poisoning of Russian former spy Sergei Skripal in the English city of Salisbury — an attack that the government blames on the Kremlin. Moscow has denied any involvement in the incident.
A report by the UK House of Commons Foreign Affairs Select Committee said that Russian money is undermining UK criticism of the Kremlin and supporting what it called a campaign by Russian President Vladimir Putin “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,” committee chairman Tom Tugendhat said.
“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,” he said.
Among its recommendations, the committee said that the UK should work with international allies to make it more difficult for Russia to issue sovereign bonds, which are not subject to sanctions, via banks that are sanctioned — a practice that the report said undermines efforts to reign in Russian behavior .
Russia has been accused of interfering in the 2016 US presidential election and executing a series of cyberattacks around the world. It has denied both.
In April, the US imposed major sanctions against 24 Russians, striking at allies of Putin in an aggressive move to punish Moscow for its alleged meddling.
The British National Crime Agency this month said that potentially hundreds of billions of Great British pounds of money-laundering impacts the UK each year and that it is a prime destination for Russians looking to legitimize the proceeds of corruption.
“The use of London as a base for the corrupt assets of Kremlin-connected individuals is now clearly linked to a wider Russian strategy and has implications for our national security,” the committee report said.
After convincing dozens of countries, including the US, to expel Russian diplomats in response to the use in March of a nerve agent on British soil, the UK has promised further measures to tighten sanctions against Russians.
“The size of London’s financial markets and their importance to Russian investors gives the UK considerable leverage over the Kremlin,” the report said.
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