Countering Russian Aggression and Tackling Illicit Finance

Matt Western Excerpts

Wednesday 23rd February 2022 Commons Chamber

[Matt Western (Warwick and Leamington) (Lab)]

In our armoury of responses to countering Russian aggression, tackling illicit finance should be one of our most powerful weapons. We all recognise that Putin’s actions on Monday were a gross violation of international law and showed complete disregard for the sovereignty of Ukraine, but the sanctions announced yesterday were widely recognised as more feeble than the Prime Minister’s tennis backhand. The scale of the proliferation of illicit finance, particularly in London, has allowed Putin and his cronies to spread their dark money through the west, and with it a dark web of influence. As it trickles down through the system, it impacts upon our politics, our economy, our housing market and our public finances.

Under the leadership of the current Prime Minister, the Conservative party has accepted £2.3 million from donors of Russia-linked money in recent years. It also accepted £160,000 from a Russian donor for one tennis match—we could call that the ultimate backhander. The Pandora papers revealed that Mohamed Amersi, a major Conservative party donor who funded the Prime Minister’s campaign to become Conservative leader, advised on a deal that was later found to be a £220 million bribe for the daughter of the then President of Uzbekistan. Like many of my colleagues, I want to see any money with links back to Putin’s regime returned. Shedding our politics from the influence of dubious cash is in the interests of us all and our democracy, and bolsters our firm stance against Russia.

As we have heard, London is the “laundromat” for corrupt money. Those are not my words, but the words of the Russia report, published in July 2020. Half of the estate agents advertising properties for sale in London at £5 million failed to register with Her Majesty’s Revenue and Customs for anti-money-laundering supervision in 2019, or had failed to pay their annual fees for that. A Treasury report published in December confirmed that luxury London homes are an

“attractive method to launder illicit funds”.

We all know that the housing market is broken, but part of the reason for that is the impact of illicit money flushing through the market and pushing up house prices for all our constituents in all parts of the land.

Perhaps worst of all is the illicit finance that is costing the British taxpayer dearly. The National Crime Agency estimates that money laundering costs the British economy £100 million—almost five times what we spend on social care. Recognising the toxic effect of illicit finance, it is time to act. If not now, when?

Six years since the then Prime Minister, David Cameron, promised to introduce a register of beneficial owners of overseas entities, we are still waiting. In Prime Minister’s questions today, the Prime Minister confirmed that an economic crime Bill will not be introduced in this parliamentary Session. We do not have time for dither and delay. We need to know who the real beneficiaries of shell companies are to end the attractive secrecy of the UK market for fraudulent cash. In that vein, Companies House is no longer fit for purpose and is not doing the job that we need it to. The Treasury Committee agreed that reform of Companies House has been too slow and is “essential” to end the scourge of illicit money.

Finally, let me turn to the question of why the Government have failed to use unexplained wealth orders, which are an effective method to prevent or deal with illicit finance. In theory, they provide an opportunity to confiscate assets without ever having to prove that the property was obtained from criminal activity, but only nine orders have been issued relating to four cases, as of February 2022. As the Russia report stated, it is far too easy for businesses that have been investing their dirty money in the UK for many years to find lawyers and accountants to somehow explain their wealth. We need to ensure that the Government have effective tools at their disposal that are fit for purpose and challenge those who enable illicit finance as well as benefit from it.