Anyone who’s lived in London as long as I have can’t fail to notice that over the last 30 years, the city’s become awash with money. From the mid-90s onwards (the last time property was affordable to anyone on an average salary) shops have got more designer, cars faster, and property commands ever more eye-watering sums. Knightsbridge and Belgravia have become the playground of oligarchs and at the centre of it all — that temple to Mammon — stands Canary Wharf, home to banks, insurance companies and lawyers, gleaming on the London skyline, its shiny windows hiding shady deals. 

‘Londongrad’, ‘Moscow-on-Thames’… That Russian money has been given a warm welcome in London is no secret. Over the last two decades, swathes of prime real estate in London and its surroundings have been bought by wealthy Russians looking for a safe haven for their cash, with few or no questions asked. 

Transparency International estimates that since 2016, £1.5bn worth of property has been bought by Russians accused of corruption or links to the Kremlin. Of this, 55% is held by off-shore companies, the preferred mode of ownership for those who like more discretion in their financial dealings.

There are the high-profile oligarchs who buy football teams. Chelsea FC, for example, has been owned by Roman Abramovich since 2003 (he has just announced that he’s put it up for sale). There are also those who support the arts. The Tate Foundation has been called to sever its ties to Viktor Vekselberg, who was made an honorary member in recognition of his donations. And then there are political donations. In 2019, Open Democracy revealed that the UK’s governing Conservative party has received over £3.5mn from Russian funders since 2010. Meanwhile, former Labour Prime Minister Tony Blair counts oligarchs’ money in donations to his charity.

Such was the concern of Russian influence in UK politics that the Intelligence and Security Committee of Parliament produced a report, entitled ‘Russia,’ to evaluate just how far it extended. The report describes the UK as having welcomed ‘oligarchs with open arms’, tracing its appeal as a destination for Russian money back to the early ’90s. It was in 1994 that the UK government introduced the investor visa scheme that allowed those investing £2m or more in the UK a fast-track (for them and their families) to permanent residency: the greater the investment, the faster the track.

With the combination of the investor visa, a light-touch approach to regulation and a booming housing market, the UK, and in particular London, became a very attractive proposition for anyone with large sums of money to clean. Described as the London ‘laundromat’, it involved a complex system of fake companies and loans and relied heavily on a lack of oversight by authorities. 

The visa scheme was scrapped on 17 February this year, to stop “corrupt elites who threaten our national security and push dirty money around our cities”, according to Home Secretary- Priti Patel. But nearly three decades of dirty money being pushed around our cities can’t be washed away so easily. And Russian influence in the UK has become ‘the new normal’ according to the Russia report, which described a range of British institutions as ‘willing beneficiaries of Russian money’ in a process it describes as ‘reputation laundering’. The report was published in July 2020, after a delay of nine months.

Sanctions work. If there was any doubt they can have an impact, you only need to look at how quickly the rouble fell on the back of western sanctions. The Bank of Russia raised interest rates to 20% — more than double their previous rate – and western news outlets reported a rush on banks and concerns about supplies of essential goods. But the impact isn’t universal and will be of little concern to those whose yachts are moored in the South of France, owners of Belgravia mansions, football clubs, art collections and all the other trappings of the oligarch. For anyone with investments safely tucked away off-shore, the current sanctions will have next to no impact. 

Journalist and writer Oliver Bullough, author of Butler to the World, speaking in a New Statesman podcast, describes how Russia is a hugely unequal society. “It makes America look like Denmark”, he said. “About 500 people – the circle around Vladimir Putin – essentially own everything, they have more wealth than the bottom 99.8% of the population”. Bullough adds that about half of their wealth, (and therefore Russia’s wealth) is held off-shore. 

The counties that buffer up to the edge of London in the west and south-west, particularly Surrey, were once known as the stockbroker belt. They encompass towns in easy reach of the square mile where bowler-hatted gents, umbrella under arm, would join the daily commute to their jobs in the city, returning each night to homes that were a picture of well-heeled respectability, and the brunt of many a sitcom. 

Some of today’s Surrey residents have had a much longer commute to the place they now call home. Particularly St George’s Hill near Weybridge, which has been dubbed “Britain’s Beverly Hills.” Properties here come with hefty price tags — sometimes over £20m — and many are owned by Russians. There may soon be a few more on the market before Liz Truss, the UK’s Foreign Secretary, finally issues her ‘hit list’ of oligarchs who are to face sanctions. The Labour party has criticised the government of being too slow, leading to ‘asset flight’. The mayor of the Ukrainian city of Lviv told The Guardian that Boris Johnson should seize such properties and use them to house Ukrainian refugees driven from their homes.

But concerns about Russian influence have been raised before. In 2018, the parliamentary report-Moscow’s Gold, written in the aftermath of the Skripal attack in Salisbury, spoke of a “direct relationship between the oligarchs’ wealth and the ability of President Putin to execute his aggressive foreign policy”. It is only through sanctioning the wealth of the oligarchs that real financial harm can be done to the Putin regime. Back in 2018,the rhetoric from Westminster was strong, but, the report noted, it carried on with “business as usual”, with corrupt assets laundered and hidden in London.

Campaigners call for more legislation and the closure of loopholes, but the legislation was there, and some still is, points out Bullough-. – He traces the roots of this back to the ’50s, when Britain ceased to be at the head of an empire, but retained in place all the mechanisms of empire that it put to use at others’ service. Over the years, some of the legislation has been whittled away, while elsewhere the legislation exists but the regulators lack the teeth — often due to a lack of resources — to implement it.

The first step to targeting illicit money (and that applies to all money, not just Russian) would be to find out who owns it. There is currently a bill going through parliament, the Economic Crime Bill, which will, according to Transparency International, bring reforms on the transparency of property ownership. But they are critical of a transition period that allows time for asset flight, and loopholes that can be exploited to allow the property’s owner to remain hidden. 

There is also a call for the registry — Companies House – to be given powers to verify registrations and remove false information. Open Democracy has raised concerns that the bill will drop the requirement for identity checks to prevent the use of fake names, a practice that is illegal, but common as there is no way of stopping it from happening. Companies registered under the name of Donald Duck and Mickey Mouse make for entertaining reading but show the contempt that the system is held in. The fact that they get away with it makes a mockery of the whole process.

And there lies another concern. Regulations are only as strong as the bodies that oversee and ensure they are adhered to. New legislation needs to be strong and without loopholes; there can be no watering down of the Economic Crime bill. But more importantly, any legislation must be supported with the powers and resources to ensure they’re adhered to, with penalties for those that don’t and the political will to allow bodies charged with oversight to do their job. 

It won’t be easy, but it’s time for London to wean itself off its addiction to easy money. What’s needed are rules, resources and the political will to enforce them. Sanctions on Russian oligarchs must be tough and immediate, but beyond that, the whole system needs cleaning up.