Illicit Finance: War in Ukraine

Ronnie Cowan Excerpts

Thursday 13th July 2023 Commons Chamber

[Ronnie Cowan (Inverclyde) (SNP)]

I will not take up too much of the House’s time, or repeat the arguments that have been eloquently put forward by previous speakers, but I would like to touch briefly on the finance aspect of the debate. It is a great irony that when we talk about murky finances and the war in Ukraine, we come back to issues of transparency in the UK time and again. The initial flurry of activity and enthusiasm to track down the wealth of sanctioned Russian elites has well and truly ground to a halt.

Where do we stand now? The Foreign Affairs Committee’s report slammed the UK Government for needing a war to galvanise them into action, stating:

“The measures in the Economic Crime (Transparency and Enforcement) Act 2022…do not go far or fast enough”

and fail to

“address the fundamental mismatch between the resources of law enforcement agencies and their targets.”

The report also stated that, while Ministers had

“spoken eloquently…about the need to clamp down on kleptocrats, rhetoric has not been matched by constructive action.”

A year on, it is hard to see what has changed. Corrupt money still flows into the United Kingdom and the UK Government seem to struggle to deal with allegations of corruption closer to home. The sad fact is that the so-called London laundromat was a national security issue long before the war in Ukraine, and it will continue to be one unless Westminster finally acts decisively. The UK sanctions regime should now move from being reactive to being proactive and preventive.

The SNP calls for the establishment of an independent illicit finance commissioner to monitor the presence of assets in the UK linked to human rights abusers. The UK cannot afford to be the weakest link in the western alliance’s struggle against Russia’s illicit finance for a single day longer. While other countries are taking strides to legislate for how frozen Russian assets can be legally seized, the UK Government have yet to make the leap from rhetoric to law making.

The forthcoming King’s Speech should include new legislation to further crack down on illicit finance in the UK financial system. Transparency International has pointed out a number of key failings. The UK Government need to be publicly accountable for the measures they have taken, to get serious about targeting illicit wealth within their borders and to collect and release the data in a more systematic manner, enabling journalists, civil society and the wider public to evaluate their efforts. As one corrupt money flows expert at Transparency International said:

“The intermittently released figures on blocked assets may seem impressive but likely represent a small fraction of all Russian dirty money hidden across the world… Governments need to be honest about the challenges they face in tracing and seizing the assets. They also need to explain what’s preventing them from pursuing further accountability measures—including confiscation—in relation to potentially illicit assets. This can help us better understand what reforms are needed.”

Economic crime has been an afterthought for far too long. The National Crime Agency budget has declined in real terms by 4.5% over the past five years. Approximately 225,000 people work in policing in England and Wales, covering London, right at the centre of this mess, but just 1,700 of them—less than 1%—work on all types of economic crime. The UK Government could follow the lead of the Dutch Parliament and set up a trust fund based on seized money from Russia and Russian oligarchs to fund the Prime Minister’s proposed Marshall plan to help rebuild Ukraine.

In the Republic of Ireland, property is frozen and subsequently forfeited if it appears to the court that a person is in possession or control of property that constitutes, directly or indirectly, proceeds of crime. The success of the Irish system stems partly from the resources provided to its Criminal Assets Bureau—something the UK has not traditionally been willing to do. The war in Ukraine has shown us that we need to close the loopholes, and we need to close them now.

--- Later in debate ---

[Anne-Marie Trevelyan]

My right hon. Friend raises such an important point. Of course, discussions with international partners will continue, to ensure that when we reach such a point—we must first help the Ukrainians to win and end this terrible war—those solutions can be put in place and, indeed, whatever the figure is can be reached. However, by bringing through the legislation last week, we have enabled one further step in ensuring that we stop any of the funds that are presently sanctioned from being released.

Importantly, on enforcement, which was raised by a number of colleagues, we have committed £50 million, following through from the integrated review refresh, to improve the enforcement of the sanctions regime. That will help us work with key partners to build both the capacity and capability to ensure that we can and do enforce the sanctions that are in place. The new G7 enforcement co-ordination mechanism, which was announced at the G7 summit just a few weeks ago, will enable the international community to tackle sanctions enforcement more effectively together.

In conclusion, I know that this House will join me in calling on Putin to withdraw Russian forces from Ukrainian territory and end this barbaric war.

[Ronnie Cowan]

I have a small point to make, just before the Minister brings the debate to a conclusion. I fully understand why we are looking at ending the war in Ukraine, freeing it from the yoke of Russia and helping it rebuild itself, but can she please assure me about this? In a global perspective, the same figures we are talking about here could be used to fund the UK’s diplomatic service, foreign embassies and trade deals, which all help us maintain peace globally, but no matter how much money we throw at that, it is a pittance compared with the cost of war, with both the financial and humanitarian costs.

[Anne-Marie Trevelyan]

As the hon. Member rightly says, our focus must be on providing in every way we can, with our international allies, all the tools needed to support the Ukrainians in their incredibly brave battle to win this war. In doing that, we will be able to support them to return to peaceful day-to-day life, so that their young people can see an exciting future as free Ukrainians once again.

Importantly—and we always hope Mr Putin is listening to understand just how seriously we see this—when he launched this war he genuinely gambled that our resolve would somehow falter, but he was wrong then and he is wrong now. For instance, my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) mentioned the wonderful young people who support the incredible positive work of Siobhan’s Trust, with the simplicity of saying, “We will bring you a pizza while you are on the frontline, just to give you the moral support to keep you going while doing that hardest of jobs in defending your families and your territory.” The positivity from our young people and so many others from across the world going into supporting Ukrainians makes it as clear as it can be that we will all stand alongside those incredibly brave Ukrainians until such time as they win. We will not waver because they will not waver. Their bravery is absolutely extraordinary. NATO is not to be divided. We will not tire, and we will continue until justice is seen for Ukraine.