City under pressure to curb cascade of illicit Russian cash

Linda J. Dodson

Ben Cowdock, co-author of the report, says change will be a “slow burner”, adding: “The culture in a lot of these private sector organisations is not going to change overnight. Especially when you look at companies that go out of their way to target high-risk organisations.”

Even then, he adds, the “private sector is so broad and so many people are offering services that if you really want to launder money into the UK, then you’re going to be able to find someone willing to do it”.

Anti-corruption campaigner Roman Borisovich, formerly an investment banker, is concerned that little has changed since his 2015 Channel 4 documentary From Russia with Cash, in which UK estate agents sought his business despite his posing as a corrupt official who had stolen money. Borisovich is co-founder of the ‘kleptocracy tours’ in which sightseers are shown lavish London properties snapped up by corrupt officials. 

“We need to see some more court cases,” he says. “Money is attracted by the fact it can come in anonymously, buy property and enjoy itself. The UK has created an atmosphere – a bubble of welcoming tainted money.”

Data suggests professionals are not turning a blind eye. The Solicitors’ Regulation Authority says it has taken 94 solicitors and firms to the Solicitors Disciplinary Tribunal for money-laundering cases since 2015, 25 of which have been struck off, and 14 suspended.

Estate agents alerted authorities to potential corruption or terrorist financing 1,345 times over the last two years, according to National Crime Agency data.

That compares to 869 reports between 2014 and 2016; it is not clear whether the flow of corrupt money is increasing or professionals are getting better at reporting. 

The property industry itself is calling for better tools so it can do more. Mark Hayward, chief executive of NAEA Propertymark, the professional body for estate agents, says: “The UK Government needs to provide tools to help agents assess the level of risk, such as an easily accessible Politically Exposed Person list and a beneficial ownership register.”

Alastair McCapra, chief executive of the Chartered Institute of Public Relations voluntary professional body, said it “shared the concerns raised within the ‘Russian report’. A spokesman adds: “We have been vocal on related matters concerning dis- and misinformation, transparency surrounding political lobbying, and ethical and transparent communications.”

Yet even well-intentioned businesses can face problems as they try to disentangle shifting Russian business, state, and criminal interests. 

“There is a lot of legitimate business from Russia and professional services companies in Britain quite properly are trying to get that bit of the business that is legitimate,” says Sir Mark Boleat, former chairman of the City of London Corporation’s policy and resources committee.  

“I’d be very surprised if the big professional services firms were not [vetting clients] all the time. And I suspect they will have turned down some new business.

“It’s more difficult when they have a significant client, then they perhaps wish they didn’t have that client – and they have to make a judgement of whether to keep them.”

He believes money-laundering rules are over-enforced, and not necessarily in an effective way. “The normal person struggles to open a bank account. But I don’t think it has any effect at all on substantial money-laundering which goes on,” he says. 

Cowdock hopes that the new Magnitsky amendments, which allow UK courts to sanction people involved in severe human rights abuses, could be extended to those involved in major corruption. 

The amendments were used for the first time in July to target Russian nationals allegedly connected to the case of Russian lawyer Sergei Magnitsky, who died in a Moscow jail in 2009 after being arrested having alleged tax fraud among Russian officials. 

Welcoming their use, Dominic Raab, the foreign secretary, insisted: “Those with blood on their hands… will not be free to waltz into this country to buy up property on the King’s Road, to do their Christmas shopping in Knightsbridge, or frankly to siphon dirty money through British banks or other financial institutions.”

Nevertheless Borisovich is calling for a public inquiry into the wider conclusions of the Russia Report, which accuses ministers of badly underestimating the threat from Russia.  

ISC member Stewart Hosie later said ministers had “actively avoided” looking for evidence of Russian interference in UK democracy – a claim fiercely rejected by Raab. Russia says the report is an example of “Russiaphobia”. 

“To say ‘actively avoided’ is so damning – it can’t be worse,” says Borisovich. “Why have they actively avoided? Incompetence? Or maybe the answer is deeper than that. The public needs to know.”

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