The UK must get tough and block Russia from the City of London’s vast web of financial services if it is to help stop an invasion of Ukraine, senior Tory Tom Tugendhat has said.
The Foreign Affairs Committee chair writes in City A.M. today that Boris Johnson should “close down the options that allow” Vladimir Putin’s army of oligarchs to launder money in London and that tough sanctions like this are the only way to stop further Russian aggression against its neighbour.
Fears continue to mount that Putin will launch an invasion of Ukraine, with more than 100,000 of his troops stationed along the Russian border.
Johnson is working together with the US and the EU to draw up a list of economic sanctions to level at Russia if Putin does invade, which could include blocking the country out of the US-based Swift international payments system, in a bid to stop further aggression.
Tugendhat said the UK has to play a large role in the economic sanctions by shutting down the so-called London Laundromat.
“Leaders in Moscow have used [the City of London] to stash their holdings overseas. Billions have gone west from those who profit from the instability they cause, but want to ensure they are immune from the consequences,” he said.
“The money hidden in accounts and properties is used to undermine the security of the UK and the British people.”
The City of London has long had a reputation as a haven for money laundering for foreign governments and organised crime.
A 2020 report from parliament’s Intelligence and Security Committee into Russia’s involvement in UK politics called for the government to crackdown on the London Laundromat.
In 2016, parliament’s Home Affairs Committee report estimated that around £100bn of illicit money was being laundered through the London property market each year.
Labour leader Sir Keir Starmer said on Tuesday that “widespread and hard-hitting sanctions must include cutting Russian access to the international financial system”.
“Europe’s over-reliance on Russian energy supplies is well documented and it simply must be addressed. And in Britain we have failed to rid our economic and political systems of the ill-gotten money used to support the Putin regime,” he said.
“If we take our obligations to global security seriously, we cannot go on allowing ourselves to be the world’s laundromat for illicit finance.”