LONDON — When Boris Johnson announced in Parliament this past week “the largest and most severe package of economic sanctions that Russia has ever seen,” the British prime minister made a boast that drew guffaws.
Russian money is so ubiquitous, so notorious in Britain’s capital city that the global financial hub was long ago nicknamed “Londongrad.”
It is an old joke, but not so funny to anti-corruption crusaders, kleptocracy tour operators and frustrated lawmakers, who have watched as post-Soviet elites with ties to the Kremlin snap up London townhouses and English estates, often bought anonymously through shell companies, with the profits generated by Russia’s version of crony capitalism.
After Johnson promised new sanctions against 100 Russian banks, defense contractors and oligarchs, to punish President Vladimir Putin and his circle for the invasion of Ukraine, many said the move was long overdue.
“For too long, our country has been a safe haven for the money Putin and his fellow bandits stole from the Russian people,” opposition Labour Party leader Keir Starmer said, simply stating the conventional wisdom.
But even as the ferocity of Russia’s attack in Ukraine produces shock and outrage in Britain, there is skepticism about how much will change here. Previous Conservative Party governments have promised to clamp down on dirty money in London, with little impact.
There have been parliamentary investigations, which have issued many reports, one of the latest under the title “Moscow’s Gold” in 2018.
There’s a toothless “unexplained wealth” ordinance that allows the British courts to compel a target to reveal the sources of their riches. Ten prosecutions a year were promised. There have been four in four years — none against Russians.
Instead, there’s an entire ecosystem of investment brokers, property agents, tax lawyers and “reputation managers” who have enriched themselves off Russian money in London.
The anti-corruption group Transparency International U.K., which has been researching real estate transactions in Britain since 2016, reported this past week that 150 properties in Britain, valued at $2 billion, were “owned by Russians accused of financial crime or with links to the Kremlin.”
“This is just the tip of the iceberg,” said Rachel Davies Teka, head of advocacy for the group, who added that 90,000 properties in Britain have been bought anonymously through shell companies, most registered in Britain’s Overseas Territories and Crown Dependencies, such as the British Virgin Islands.
Tom Tugendhat, the chair of the Foreign Affairs Committee, said London’s role in global finance has delivered “considerable benefits” to the British people. “But the reality is that the channels of wealth have also been carrying corruption and crime through our markets,” he said, adding that the government “has done little to address these dangers.”
Margaret Hodge, a Labour Party lawmaker who has led the charge to slow the sketchy foreign funds from flowing into business and politics, put it this way: “There’s a ‘for sale’ sign hanging over Britain.”
“Britain asks few questions, doesn’t care who you are, and doesn’t mind where your money comes from,” Hodges wrote in the Guardian newspaper.
Protesters who massed outside of Downing Street on Thursday night, many of them originally from Ukraine, told a Washington Post reporter they assumed the British establishment was corrupted by its embrace of Russian money.
As red double-decker buses drove by, a man on a loudspeaker claimed that Russians had made “trillions” from oil and gas over the years.
“That money is not kept in Russia. That money is in London, that money is in New York, that money is in Switzerland,” he shouted.
Some of the demonstrators held aloft signs that read “Stop Russian money laundering in London” and “Block Putin’s wallets in London.”
Liubov Fodor, 53, a Ukrainian-born health worker, was in the crowd and accused Britain and its allies of enabling Putin since his 2014 invasion of Crimea. “Instead of punishing Putin, they’ve sponsored him, by buying oil and gas, supporting oligarchs in London, on the French Riviera,” she said.
London prides itself on being a draw for the global rich. It can be a very nice place to be — and not just for Russia’s bad apples. London is safe, cosmopolitan, with luxury goods at Harrods, skilled doctors on Harley Street, and posh boarding schools like Johnson’s alma mater, Eton College, which costs $70,000 a year for one boy’s tuition.
The growth of London’s financial services sector also happened to coincide with the collapse of the Soviet Union in the 1990s. Elites from the former U.S.S.R. had vast fortunes to spend, invest and launder — and the city provided the way.
“There is all sorts of dodgy cash in London,” said Helena Wood, a senior fellow with RUSI, a think tank.
She said accountants and lawyers stand ready to help distance people’s wealth from its sources, from any corruption or criminality, often by pouring it into London’s red-hot market for properties, which can be flipped or inherited.
Johnson this past week announced the creation of a new “kleptocracy cell” at the National Crime Agency that will “target sanctions evasion and corrupt Russian assets hidden in the U.K.”
Wood, who used to work at that agency, said taking on oligarchs is difficult, and she is skeptical that the new unit would make much of an impact unless it’s backed with considerable resources.
Unlike drug traffickers who may eschew publicity, oligarchs are often willing to have their day in court. “They turn up with banks of lawyers” who square off against poorly resourced litigators and law enforcement officials, she said. “I can only describe it as a David-and-Goliath battle.”
In one high-profile case, the National Crime Agency lost against the family of the former president of Kazakhstan. Using the “unexplained wealth” statute, the agency froze three of the family’s properties, including one on a London street dubbed “Billionaire’s Row.” But the U.K.'s High Court ruled the agency hadn’t proved that funds used to buy the properties were acquired through unlawful activity.
Britain’s legal system actually helps protect oligarchs, who can sue reporters and researchers under tough libel laws, while being confident that they can keep their fancy homes, with indoor pools and cinemas.
An oligarch’s enemies cannot buy a London judge.
A recent report on dirty money, from the Chatham House think tank, concluded that Britain “is ill-equipped to assess the risk of corruption from transnational kleptocracy, which has undermined the integrity of important domestic institutions and weakened the rule of law.”
The authors wrote that “the success of kleptocracy requires that the perpetrators are hidden in plain sight,” with “professional enablers” available to help exploit loopholes.
They found that not only is money being laundered in London, but reputations are, too. “Donations to charities — especially those headed by members of the British royal family — are a key part,” according to the report.
And so is giving money to political parties.
In 2008, Britain introduced the “golden visa” program, which allowed rich Russians and other wealthy nationals to live and spend in London — and after seven or eight years, to apply for British citizenship, which would allow them to donate freely to British political parties.
Between 2010 and 2019, Johnson’s Conservative Party received £3.5 million from donors with a Russian business background, according to a study by the group Open Democracy.
Since then, the volume of donations appears to have increased.
The prime minister is promising a shift.
As of last month, golden visas are no more.
And after Putin’s forces entered Ukraine, Johnson said he would close the loopholes and improve the unexplained wealth law before the spring recess in Parliament.
He also pledged to introduce an economic crime bill. For the first time, Britain would demand to know the individuals who own the shell companies that buy properties, and a buyer of a Kensington mansion — or a Cotswold cottage — would be identified by a real name.
That’s not Johnson’s idea, though. It was first proposed in 2016, two prime ministers ago.