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Closing Legal Loopholes Could Enforce Russia Sanctions



Recent revelations have brought to light alarming legal loopholes that enable allies of Russian President Vladimir Putin to sidestep Western sanctions, particularly in the realm of property ownership in London.


Despite the UK government's efforts to curb economic crime through measures like a public register of foreign business-owned buildings, loopholes persist, allowing individual Russian allies to maintain ownership of multimillion-pound properties in prestigious London neighborhoods.

 

A study conducted by the Kensington Against Dirty Money campaign has uncovered that over 40% of overseas-owned properties in London are shielded behind trusts, making it challenging to trace the true beneficiaries and facilitating illicit asset ownership. It serves as a glaring example of how these loopholes undermine the effectiveness of sanctions and efforts to combat economic crime.

 

Despite being sanctioned by the British government in 2022 following Russia's invasion of Ukraine, these assets remain untouched. This failure to freeze assets of sanctioned individuals not only undermines the efficacy of sanctions but also sends a message that the UK is not fully committed to combating illicit financial activities within its borders.

 

Joe Powell, co-founder of Kensington Against Dirty Money, has rightly pointed out the absurdity of senior Putin allies enjoying luxury properties in London while being on the UK sanctions list. The existence of such loopholes not only compromises national security but also contradicts the government's stated commitment to cracking down on illicit finance and money laundering.

 

Shadow Foreign Secretary David Lammy's pledge to make London the "anti-corruption capital of the world" underscores the urgent need for legislative action to close these loopholes. Labour's proposed measures, including a whistleblower scheme to expose stolen assets and sanctions breaches, are steps in the right direction.

 

The Economic Crime Act of 2022 and the introduction of Unexplained Wealth Orders have been significant steps in enhancing transparency and targeting dirty money in Britain. However, concrete legislative changes are necessary to effectively deter and penalize those exploiting legal loopholes for illicit gains.

 

The Office for Financial Sanctions Implementation (OFSI) at the Treasury plays a crucial role in enforcing sanctions and combating financial crime. It is imperative that the OFSI rigorously assesses instances of reported non-compliance and takes swift action against those found in breach of UK sanctions laws. Non-compliance with sanctions must be treated as a serious offense, with appropriate penalties to deter future violations.

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