In the UK, 176 luxury properties worth over £4.4b are reportedly connected to the Kremlin, many of them in Central LondonFrans Ruiter, Adrien Wodey & Emaan Ullah

A mansion at Kensington Palace Gardens. A gated community in Surrey. Georgian townhouses in London’s ’Red Square.’ As missiles fell on Kyiv’s pastel spires in the early hours of February 24th, these towers of Russian wealth cast a grey shadow over London. Anticorruption Action Centre (AntAC), a Ukrainian NGO, is urging the United Kingdom to “block Putin’s wallets,” in reference to the assets of former ministers and well-placed businesspeople which earn the city its moniker ’Londongrad.’ Being rich and Russian is not a crime, but close links between money and politics in kleptocracies like Russia demand scrutiny into the sources of exorbitant wealth. As a foreboding 2018 Foreign Affairs Committee report states, the UK’s toleration of ill-gotten funds “undermines the strength and unity of the global diplomatic response to Russian state actions.”

A new Battle of Britain – in the banks rather than on the beaches – is taking shape. In the past week, Prime Minister Boris Johnson has announced sanctions and asset freezes targeting hundreds of banks, businesses, and individuals. The toughest of these cut major Russian banks off from the SWIFT financial system. The Home Office also ended the notorious “golden visa” program which has expedited residency for 2,500 Russian millionaires.

“As missiles fell on Kyiv’s pastel spires in the early hours of February 24th, these towers of Russian wealth cast a grey shadow over London”

Even if further sanctions materialize, Ukrainians believe they will be insufficient to change the Kremlin’s calculus. Beyond other forms of hard support and immediate help for refugees, a complete leveling-up of the fight against kleptocracy is needed, akin to the overhaul of the US intelligence apparatus to fight terrorism after 9/11. This means eliminating corporate secrecy, stamping out money laundering, and exposing domestic enablers – all with vastly more resources from the UK Government.

The easiest place to start is with the 176 luxury properties worth over £4.4b belonging to individuals believed to be connected to the Kremlin. Most are so well known that since 2016, journalists have led “kleptocracy tours” past these empty residences. Yet this is only the tip of a palatial iceberg. The NGOs Transparency International and Global Witness estimate that there are more than 85,000 UK properties owned by anonymous foreign corporations, known as shell companies. No longer the problem solely of tropical tax havens, opaque corporate structures like the UK’s Scottish Limited Partnerships have helped to move at least £15b in suspected proceeds of corruption out of Russia, prompting Scottish First Minister Nicola Sturgeon to renew calls for their dissolution.

The introduction of a transparent registry of company owners at the UK’s Companies House in 2016 can be applauded, but gaps like a lack of verification and exceptions for British overseas territories leave the door open to abuse by the very actors we most need to detect. Similarly, unexplained wealth orders (UWOs), meant to help law enforcement more quickly confiscate corruption-linked assets, have only been used in four cases since 2018. A step-change in skills, talent, and resources is needed. For instance, the UK’s Financial Intelligence Unit, responsible for reviewing banks’ suspicious activity reports on money laundering risks, has roughly 100 investigators for over 700,000 annual filings. The Economic Crime Bill brought forward on Monday night is a promising step towards creating a register of property owners and strengthening UWO tools, among other reforms. It must be resourced with equal ambition.

Behind these technicalities are professional enablers who, through varying degrees of wilful negligence, open a back door to the West for Kremlin allies. High-profile exposés like the Panama, Paradise, and Pandora papers have brought some scrutiny to company registration agents who lend their services to the shell companies mentioned above. Yet a network of other professions must also be held to account. Lawyers have used attorney-client privilege to shield dubious transactions from government scrutiny. PR firms and defamation lawyers have brought spurious libel cases against journalists investigating corruption – especially in the UK where laws are most permissive. For example, late Maltese journalist Daphne Caruana Galizia had 47 libel lawsuits open against her at the time of her assassination in 2017, many of them brought by British law firms in British courts. New legislation could clarify anti-money laundering expectations for lawyers and help courts dismiss cases intended merely to waste time and resources.

“The contrast between a prosperous, democratic Ukraine and a pallid Russia drove Putin to war”

Students can help universities and think tanks reduce the risk of ‘reputation laundering’ by accepting funds potentially gained through corruption. The University of Oxford has been criticised over a £75m donation from Leonard Blavatnik, of the eponymous Blavatnik School of Government, whose fortune has been described by experts as being “obtained by and with the consent of the Kremlin, at the expense of the state budget and the Russian people.” Not to escape blame, the University of Cambridge was named a half-dozen times in a 2021 National Endowment for Democracy report for accepting donations from politically exposed figures such as a Ukrainian oligarch with ties to Russia who is now under international sanctions. Greater scrutiny, such as consultation with country experts, can ensure that universities enable free societies – not their assailants.


Mountain View

Students rally in support of Ukraine

To be clear, these measures are no substitute for an immediate response to the “hideous and barbaric” conquest of Europe’s largest nation, numbering 44 million people. But the rubles siphoned out of Russia and recycled in the UK are an IV drip sustaining the Kremlin elite, even as ordinary Russians are bled dry by economic sanctions. Experts believe it was indeed the need to distract from the widening contrast between a prosperous, democratic Ukraine and an increasingly pallid Russia that drove Putin to war. If so, countering illicit wealth here in the UK can expose who is truly to blame for Russia’s woes. The UK must fight the Kremlin on its own turf – which may be closer to home than many of us would care to admit.