The government should speed up plans to promote transparency by introducing a register of corporate ownerships, the foreign affairs committee said in a report published on Monday.
MPs called on the government to use the powers outlined in the Sanctions and Anti-Money Laundering bill, once available, and work with the EU, US and G7 to “tighten loopholes” that allow Russians to hide dirty money in the UK and elsewhere.
The bill, which aims to follow the flow of ‘dirty money’ by introducing a public register of company ownership, was finally backed by the government earlier this month and is in the final stages of passage through parliament.
The committee said that the government was allowing “plutocrats and human rights abusers to use the City of London to launder their ill-gotten funds to circumvent sanctions”, in the report, Moscow’s Gold: Russian Corruption in the UK.
It added that the government’s approach to tackling international money laundering is putting money “directly into the hands of regimes that could harm the UK, its interests and its allies”.
The register of beneficial ownerships should be introduced in the UK’s overseas territories and crown dependencies by the end of 2020, the MPs said. These are “important routes through which dirty money enters the UK”, they added.
“The government should set out its plans for assisting the governments of the overseas territories to establish publicly accessible beneficial ownership registers before 31 December 2020.
“We also call on the government to provide the same level of assistance to the crown dependencies, and to encourage them to take steps to meet the same standard of transparency,” the report said.
Additionally, the report called on the government to work with the EU and US to stop Russia issuing new sovereign debt on global markets with the assistance of sanctioned banks.
On 16 March, Russia raised $4bn in Eurobond issuances, nearly half of which were bought by investors from the UK, the report noted.
“The ease with which the Russian government was able to raise funds in London despite the strong measures that the government took in the wake of the Salisbury attack raises serious questions about the government’s commitment to combating Russian state aggression,” the report said.
It highlighted that Russia’s economy was approximately the size of Spain’s and “deeply interconnected to the Western financial system”, which gives the EU, US and other G7 countries “significant leverage in seeking to counter the Kremlin’s aggressive behaviour”.
Committee chair Tom Tugendhat said: “The scale of damage that this ‘dirty money’ can do to UK foreign policy interests dwarfs the benefit of Russian transaction in the City.
“There is no excuse for the UK to turn a blind eye as president Putin’s kleptocrats and human rights abusers use money laundered through London to corrupt our friends, weaken our alliances, and erode faith in our institutions.”
