Russia (Sanctions) (EU Exit) (Amendment) (No. 2) Regulations 2022

Debate between Baroness Kramer and Lord Austin of Dudley

Thursday 3rd March 2022 Lords Chamber

[Lord Austin of Dudley (Non-Afl)]

My Lords, I congratulate the Minister and the Government on the tough regime of sanctions that has been introduced this week, and I agree with every word of the previous speech.

This is an extraordinary time. Civilians are being bombed and war crimes are being committed, and extraordinary times require special and extraordinary responses. Ministers are completely right to say that one of the ways to isolate a weakened Putin and to put him under pressure is to target him and his supporters and the money they have stolen from the impoverished people of Russia. As the Foreign Secretary has said, we should sanction Russian government Ministers, senior officials, Putin’s inner circle, the oligarchs who look after his funds, members of the parliament and senior members of the security services and armed forces.

We in this country have a particular responsibility, because so much of the money looted from the people of Russia has been spent and invested here in London. The way to identify the funds, the properties that such people have bought and the businesses they have invested in is to target those who enable them to spend and invest these funds. Just as accountants are required to report clients they suspect of tax evasion, so other businesses and professionals should be required to report people they suspect of benefiting from Putin’s regime. We should make it a legal requirement for lawyers, accountants, company formation agencies, financial services firms, investment companies and estate agents to report on the structures and holdings set up to allow sanctioned individuals to hold assets in this country. Surely, this would make the whole sanctions process swifter, simpler and more straightforward. Will the Minister look at including measures such as this in the sanctions Bill being brought forward in the next few days?

Secondly, is it true, as Politico reported this morning, that during the rollover of EU sanctions rules into British law during the Brexit process, the UK sanctions regime became significantly more procedurally complex because the new laws were amended to ensure procedural fairness for those being sanctioned, to strengthen measures those sanctions could take in response, and to ensure that sanctions were imposed in what was described at the time as a “proportionate manner”? If it is the case that these changes made the imposition of sanctions more complicated and difficult here in the UK than in the EU or the US, should we not use the legislation that the Minister is bringing forward to unravel these changes so that we can speed these processes up?

Thirdly, is it also the case, as reported in this morning’s Times, that the Government are finding it difficult—despite the work the Minister is doing, which I applaud, and the work of his officials, who I know are working flat out on this—to impose sanctions swiftly because of a shortage of lawyers and officials able to carry out the work? If so, what plans do Ministers have to recruit more people urgently to do this?

Finally, what happens to funds and property and other assets that are frozen or seized from people in this process? I suggest that they be held in trust to support the future democratic Government of a free Ukraine, to rebuild their economy.

[Baroness Kramer (LD)]

My Lords, I raise again with the Government the issue of cryptocurrencies. Effectively, Russians cannot now transfer roubles into dollars, euros and pounds sterling but they can transfer into cryptocurrency. The Minister will know that the Ukrainian Minister of Finance on Monday called on all the decentralised finance—the DeFi exchanges—to remove Russia from their schemes. Some, such as Coinbase, have done so, but others—Binance is the big one that comes to mind—have decided to sanction only the 100 names on the sanctions list and otherwise to allow free translation of roubles into cryptocurrency. We have heard from the Ukrainian Government that this is a serious mechanism for evading sanctions. Binance, which I mentioned, is registered in the Cayman Islands and therefore falls into the UK financial family. What more will the Minister do to prevent what may have looked like a loophole from becoming what is now growing into—a major escape hole?