The UK must block Russia from the City of London’s web of financial services firms if it invades Ukraine, Sir Keir Starmer has said.
The Labour leader said Boris Johnson must make “tough decisions” when drawing up potential sanctions against the Kremlin, including “cutting Russian access to the international financial system” and stopping the “illicit laundromat” in the City of London.
Johnson told the House of Commons today that the UK and its western allies are now drawing up a list of potential sanctions against Russia if it invades its neighbour.
More than 100,000 Russian troops are stationed along the border with Ukraine, with fears increasing that an attack will be launched.
The UK and US have withdrawn much of their respective embassy staff due to the increasingly unstable situation, with Johnson saying that the UK, EU, US and other Nato countries must work together to prevent further aggression.
The Prime Minister said the rest of Europe “cannot bargain away the vision of Europe whole and free” that emerged after the fall of the Soviet Union.
“We will not reopen that divide by agreeing to overturn the European security order because Russia has placed a gun to Ukraine’s head,” Johnson said.
Starmer said the UK “must now change course, and show Russia that any further aggression will result in severe real-world consequences”.
“Widespread and hard-hitting sanctions must include cutting Russian access to the international financial system,” Starmer said.
“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.
“If we take our obligations to global security seriously, we cannot go on allowing ourselves to be the world’s laundromat for illicit finance.”
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 so-called “London laundry”.
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.
Bill Browder, fund manager and mastermind of the Magnitsky sanctions, said blocking Russia’s access to the City would be helpful but that it would not do enough to deter Putin.
“The most important thing to do is target the sanctions so they touch Vladimir Putin personally. In order to do that one needs to look where his personal interests are. His main personal interest is that he’s stolen an enormous amount of money and he doesn’t keep it in his own name – its hel’d by oligarch trustees,” he said.
“The easy way is to make a list of those oligarch trustees and those people already known and start moving down the list and [placing financial sanctions on them] even before Russia invades Ukraine.”