How London became the city of choice for Russian ‘dirty money’

US officials fear that imposing sanctions on Russia amid tensions with Ukraine will be impossible due to the UK’s refusal to stop illicit funds flowing into London.

Diplomatic sources told The Times that US State Department officials have repeatedly voiced “dismay and frustration” at successive government’s lack of willingness to clamp down on the arrival of suspect funds, especially in what they have termed “Londongrad”.

Joe Biden has been joined by a string of British ministers in his calls to slap a massive package of sanctions on Russia should it strike into Ukraine. But “the fear is that Russian money is so entrenched in London now that the opportunity to use it as leverage against Putin could be lost”, a source in Washington told the paper.

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“Biden is talking about sanctioning Putin himself but that can only be symbolic. Putin doesn’t hold his money abroad, it is all in the kleptocrats’ names and a hell of a lot of it is sitting in houses in Knightsbridge and Belgravia right under your government’s noses.”

‘Welcome to Londongrad’

After the collapse of the Soviet Union, “a group of savvy (though not always savoury) business magnates found themselves in possession of enormous riches”, said Tatler.

Rather than stay in Russia, where their newfound wealth – and even their lives – were at risk, “they looked west, to the world’s financial capital – and London’s politicians welcomed them and their wallets with open arms”.

This willingness to overlook the origins of the new arrivals’ riches was part of the appeal for many Russians. The UK has simply “turned a blind eye” to Russian “dirty money” being laundered through London, according to a report released in 2018 by the Commons Foreign Affairs Committee.

In return, the UK financial sector became a “major beneficiary of the massive flight of Russian cash”, as Reuters reported at the time.

Many wealthy Russians were also drawn by “the benefits of a more stable country”, including “property values, high-quality private education and a renowned judicial system”, The Times reported.

Others came in search of social opportunities - and found them. Within a generation, a number of Russian families have become fixtures of the British social scene, added Tatler.

“Where the parents may have been seen as parvenus, the progeny are unambiguously accepted as mainstays of high society – they decorate the pages of Bystanders both British and Russian, they’re regulars at Henley, Ascot and Annabel’s,”.

Indeed, there are “so many rich, showy, notorious Russians [in London] that it has become a cliche”, said The Washington Post. “Moscow-on-the-Thames? Londongrad? Take your pick.”

Too late to change

While the true sum “invested by oligarchs in Britain is notoriously hard to track”, The Times said, the government has previously placed the figure at around £100bn a year. The anti-sleaze organisation Transparency International said that it has identified property worth £1bn bought with suspect funds from Russia.

And none of this takes into account the £2m the Conservatives are reported to have received “from donors with Russian links since Johnson became prime minister in 2019”.

“Campaigners have long warned that unless the fire hydrant of Russian dirty money flooding London were turned off it would become uncontrollable,” the paper reported.

And with sanctions against Russia now top of the agenda for the UK’s allies, successive governments may have left it “too late to untangle the web of Russian influence”.