MPs have called for a tougher crackdown on City firms that support Russia’s regime amid continuing aggression against Ukraine.
London’s ‘enablers’, from bankers to lawyers to PR managers, “help the corrupt to act with impunity by using our legal and financial systems to launder and conceal their wealth”, according to a report from the Foreign Affairs Committee published 30 June.
As the UK government began imposing sanctions in the wake of Russia’s invasion, it “appeared to lack a grip on both the enablers of potential sanctions targets and, crucially, their proxies to whom wealth was transferred,” the committee found.
While the MPs said they welcomed an initial government consultation on so-called SLAPPS — strategic lawsuits against public participation that are often used by oligarchs to silence critics — measures to properly tackle the professional services firms that assist kleptocrats are “still outstanding”.
Now is the time to take action to strengthen legislation against enablers, the report concluded.
“The vectors of illicit finance are often companies,” the report says. “Therefore, the [Foreign, Commonwealth and Development Office] should work across government to encourage reform of outdated and ineffective corporate criminal liability laws which mean that it is difficult to hold large companies to account for economic crimes.”
The government should study lessons from US legislation such as the Enablers Bill currently before Congress, it added.
“For far too long successive governments have allowed malign actors and kleptocrats to wash their dirty money in the London ‘laundromat’,” committee chair Tom Tugendhat said. “Complacency has left the door open to corrupt wealth taking root and morally bankrupt billionaires using the UK as a safe deposit box.”
Tugendhat said that his committee will conduct a further report into to how the government can “curb professional enablers who wittingly or otherwise help kleptocrats to establish a financial foothold in the UK and to stifle investigation of their affairs.”
The role of London’s professional services firms in supporting Russia was thrust into the spotlight around the time of the invasion. The UK government banned the export of services such as accountancy, public relations and management consultancy in May.
But British law firms continue to be be used by kleptocrats and criminals to suppress evidence of their corruption or protect their reputation through vexatious litigation, the Foreign Affairs Committee’s report found.
This has led to calls from leading financial services figures such as hedge-fund founder Bill Browder to hit lawyers who have links to Russia and president Vladimir Putin with visa bans.
Senior City lawyers have hit back at such criticism, however, calling it “populist posturing.”
To contact the author of this story with feedback or news, email Justin Cash