ANTI CORRUPTION

It’s time the UK cracked down on dirty Russian money

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Russia’s aggres­sion against Ukraine con­tin­ues to mount.

Last month, Russian author­i­ties ille­gal­ly appre­hend­ed three Ukrainian Navy ships and 24 sailors near the Sea of Azov. They are still being held.

Just this week, com­mer­cial­ly avail­able satel­lite imagery revealed a mas­sive Russian mil­i­tary build-up only few miles from the Ukrainian bor­der.

Each new act of Russian aggres­sion rais­es the ques­tion: How best to respond?

Following the naval inter­dic­tion near the Sea of Azov, I called for beef­ing up NATO’s pres­ence in the Black Sea and boost­ing Ukraine’s mar­itime capa­bil­i­ties with high-tech radars and anti-ship mis­siles. In Europe, the talk has focused on extend­ing and increas­ing eco­nom­ic sanc­tions against Moscow.

Both options can be part of a larg­er strat­e­gy to sup­port Ukraine and con­front Russian aggres­sion. However, nei­ther approach will work absent uni­ty in the West. Surprisingly, one area where the West has not come to agree­ment is how to deal with dirty Russian mon­ey slush­ing around the United Kingdom. 

So far, the UK has come up well short of clamp­ing down on dirty mon­ey. Despite dozens of eco­nom­ic sanc­tions from the United States and EU, Russian oli­garchs with dodgy con­nec­tions to London have been able to exploit legal loop­holes and the puz­zling com­pla­cen­cy of British author­i­ties.

It is time for Congress and the Trump admin­is­tra­tion to let London know, in no uncer­tain terms, that this is unac­cept­able.

A recent report by the House of Commons Foreign Affairs Committee laid out just how Putin’s Kremlin cronies are able to skirt sanc­tions. In metic­u­lous detail, “Moscow’s Gold: Russian Corruption in the UK” describes how the British legal sys­tem enables the Russians to get away with it and what the UK needs to do about it.

The case of Oleg Deripaska per­haps best demon­strates the divide between Washington and London when it comes to deal­ing with Russia.

Deripaska is cur­rent­ly a per­son of inter­est in the U.S. inves­ti­ga­tion into Russian elec­tion med­dling due to his busi­ness ties with for­mer Trump cam­paign man­ag­er Paul Manafort. He is also on the U.S. sanc­tions list. Despite this, and despite seri­ous con­cerns about Deripaska’s close ties to Putin and the Kremlin, he was able to list his En+ Group PLC on the London Stock Exchange and raise more than $1.5 bil­lion late last year in its ini­tial pub­lic offer­ing.

Last week, London’s Daily Telegraph report­ed that at least three sus­pect­ed for­mer Russian spies occu­py key posi­tions in Deripaska’s busi­ness­es, includ­ing En+ Group and his hold­ing com­pa­ny, Basic Element. (Also under U.S. sanc­tions, Basic Element is based in the British tax haven of Jersey.) Even sup­pos­ed­ly “ex” spies are nev­er far from the Kremlin. Deripaska’s per­son­nel choic­es have raised eye­brows in Washington pol­i­cy cir­cles, but the UK con­tin­ues to turn a blind eye. 

Since the poi­son­ing last sum­mer of for­mer dou­ble agent Sergei Skripal and his daugh­ter in Salisbury, England, polit­i­cal lead­ers in the UK have talked a lot about crack­ing down on dirty Russian mon­ey in London. However, very lit­tle has been done. Frankly, the UK should con­sid­er the pres­ence of dirty Russian mon­ey as nation­al secu­ri­ty issue.

As that recent Foreign Affairs Committee report not­ed:

The assets stored and laun­dered in London both direct­ly and indi­rect­ly sup­port President Putin’s cam­paign to sub­vert the inter­na­tion­al rules-based sys­tem, under­mine our allies, and erode the mutu­al­ly-rein­forc­ing inter­na­tion­al net­works that sup­port UK for­eign pol­i­cy.”

The size of London’s finan­cial mar­kets and their impor­tance to Russian investors give the UK con­sid­er­able lever­age over the Kremlin. It is time to use it. Until the UK gets tough, Russia will con­tin­ue to take advan­tage of the sit­u­a­tion, with dam­ag­ing effects on the UK, the US and the transat­lantic com­mu­ni­ty.

For months, the British gov­ern­ment has been pre-occu­pied with Brexit. And with the prime min­is­ter fac­ing immense polit­i­cal pres­sure in the House of Commons, Russian adven­tur­ism and cor­rup­tion is not a front-of-mind issue. But as recent events in Ukraine show, what­ev­er the fate of Brexit and May, there will be no let-up with Russia’s aggres­sion, unless the West makes that aggres­sion too expen­sive to sus­tain.

Now is the time to act.

Washington should use the priv­i­leges offered by the US-UK Special Relationship to have a frank and open con­ver­sa­tion with their British coun­ter­parts about Russian mon­ey.

At the very least, there should also be clos­er con­sul­ta­tion between British author­i­ties and the U.S. Treasury and intel­li­gence agen­cies to avoid a repeat of an EN+ Group-like list­ing on the London Stock Exchange.

After all, friends do not let friends swim in dirty Russian mon­ey.

Luke Coffey is the direc­tor of The Heritage Foundation’s Allison Center for Foreign Policy Studies.

It’s time the UK cracked down on dirty Russian mon­ey

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