The government’s sanctions regime must be strengthened to include relatives, according to campaigners, as it emerged the eight-year-old daughter of one of Vladimir Putin’s former regional governors owns a £2.3 million flat in Kensington.
According to The Times’s analysis, relatives of people with ties to the Kremlin who have been sanctioned by either London or Kyiv own hundreds of millions of pounds worth of property.
Since Russia invaded Ukraine last year, more than 1,300 people have had their assets in the UK frozen.
But, according to information made public as part of new anti-money laundering declarations, homes owned by family members of people connected to the government are much less likely to have been affected.
According to a joint study by The Times and Transparency International, a bar and an office building in Paddington that belong to the wife of a UK-sanctioned oligarch were purchased for close to £100 million. A £40 million 19th-century Surrey estate was left in part to the offspring of a sanctioned Russian tobacco tycoon. A £2.3 million Kensington apartment is owned by the eight-year-old kid of a former regional governor who served as chair of the Russian Bar Association and is under Ukrainian sanctions.
A number of properties in Earls Court and Tulles Hill are owned by the family of a pro-Russian political activist from Crimea who assisted in the annexation of the area by Russia and is wanted in Ukraine on suspicion of treason.
Senior MPs urged the government to change the sanctions system last night.
” We need to take care of everything very fast,” said Sir Iain Duncan Smith, a former Tory leader, and co-chairman of the parliamentary all-party group on Magnitsky sanctions. “The US government has sanctioned more people and to a larger extent when it comes to families than the UK, thus the UK should learn from them. Without a doubt, the UK lags much behind the US.”
An effective sanctions program depends on enforcement, according to the chairwoman of the foreign affairs select committee, Alicia Kearns. The Economic Crime [and Corporate Transparency] Law was enacted by parliament to address the loopholes that oligarchs use to conceal their wealth via their offspring.
The government must provide law enforcement with the confidence and resources necessary to employ the instruments at its disposal, such as unexplained wealth orders.
“The economic crime bill before the Lords is a chance for us to really clamp down… and ensure that the reach of sanctions is as effective as possible,” said Sir Robert Buckland, a former justice minister.
The discoveries will raise awareness of the potential methods by which sanctions regimes might be evaded.
Unless otherwise specified, those who are connected to a person who has been sanctioned are free to sell their possessions at any time, even if the money to buy them came from the sanctioned person. There are currently not many relatives of sanctioned people who are likewise subject to sanctions.
Dame Margaret Hodge, the Labour member who chairs the parliamentary group’s all-party anti-corruption committee, declared: “Our sanctions framework is disintegrating almost as swiftly as it was constructed. And until we fix the loopholes, step up law enforcement, and remove our culture of opaque ownership, it will keep letting Russian oligarchs off the hook.
“People placed on the UK sanctions list have frequently dispersed their money among those close to them, using trust arrangements to obfuscate the lines of ownership even further,” said Ben Cowdock, investigations head at Transparency International UK.
According to Rudi Kesic CEO at Verify 365, some experts believe that the sanctions are at risk of “falling to pieces” due to various factors, including divergent interests among the countries imposing the sanctions, potential for sanctions fatigue, and Russia’s ability to evade or mitigate the impact of the sanctions.
He also notes that some countries have already started to ease their sanctions on Russia, citing examples such as Italy, Austria, and Hungary.
This has raised questions about the unity and coherence of the sanction regime, and some experts argue that the lack of a unified approach could undermine the effectiveness of the sanctions.
Tracking the money is crucial to make sanctions work, particularly when people are targeted frequently to distribute their riches among friends, family, and acquaintances.
Rudi added that law firms that fail to adopt the latest technologies risk being exposed to fraud and other financial crimes. With AML regulations becoming increasingly strict, it’s crucial that law firms have access to the tools they need to meet their compliance obligations.
“Verify 365 advanced platform offers a comprehensive range of AML compliance tools, including PEPs and sanction checks, as well as a source of funds checks using open banking analytics. By leveraging the power of open banking, Verify 365 can help law firms identify potential sources of funds, assess risk, and prevent fraudulent activity.”
PEPs and sanctions lists are a major concern for law firms, as they must ensure that they do not engage in transactions with individuals or entities that are subject to sanctions or politically exposed.
“Verify 365 platform automates the process of screening clients against sanctions lists and identifying PEPs, reducing the risk of errors and ensuring that law firms are fully compliant with AML regulations,” he added. “With its advanced technology solutions and comprehensive range of AML compliance tools, Verify 365 is well-positioned to help law firms stay ahead of the curve and mitigate their risk exposure.”