One Year on From Russia’s Invasion of Ukraine, How is the U.K.’s Fight Against Kleptocratic Wealth Faring?

As the tour bus ascends North London’s Highgate West Hill, dozens of tour-goers struggle to peer over a tall red brick wall and catch a glimpse of Witanhurst, a Grade II-listed mansion believed to be worth 300 million pounds (about $361 million) and owned by the Russian billionaire Andrey Guryev.

Roman Borisovich, an anti-corruption campaigner and one of the tour’s organizers, describes what’s hidden behind the walls of London’s second-largest private residence after Buckingham Palace: A private cinema hall, a 25-car garage, and an Olympic-sized swimming pool.

In recent years, properties like Guriyev’s have been snapped up — and vastly expanded — by the Russian oligarchs whose fortunes have exploded under the rule of President Vladimir Putin. These oligarchs plundered Russian state resources after the fall of the USSR, and London became their favored second home.

Moments after skirting Guriyev’s property, the bus passes Beechwood House, acquired by ex-Arsenal FC shareholder Alisher Usmanov in 2008 for 48 million pounds ($96.1 million). Next door is Athlone House, a 65-million-pound ($80.1-million) mansion owned by the billionaire Mikhail Fridman. Soon after: a 17.95-million-pound ($24.61-million) property once owned by the son of Vladimir Yakunin, a former KGB colleague of Putin’s.

Since 2016, grassroots organization the Campaign for Legislation Against Moneylaundering in Properties by Kleptocrats, known as ClampK, has been visiting properties like these on what they call “kleptocracy tours.” Nowadays, however, these tours have added significance. With many of these oligarchs now targeted by an intensive sanctions program launched in response to Russia’s aggression in Ukraine, some of their most valuable assets, like these mansions, have been frozen amid U.K. government efforts to clamp down on Kremlin-linked wealth.

Arthur Doohan, ClampK’s co-founder, says the tour’s purpose is to “highlight the scale of the damage done by kleptocrats to both the countries that they steal from and the countries that receive stolen monies.”

Oliver Bullough, an investigative journalist and tour organizer, says from the front of the bus that it will take years of dedicated political will, robust legislation, and proper resourcing of law enforcement to reverse what he calls the “criminal foolishness” of having allowed dirty money to infiltrate the U.K.’s economy over the past few decades.

“By giving people a place to spend stolen money, we’re just encouraging them to steal more,” Bullough says.

‘A Quick and Dirty Tool’

On the day of Russia’s invasion of Ukraine, the U.K.’s prime minister at the time, Boris Johnson, promised a “remorseless mission to squeeze Russia from the global economy.”

Since then, the U.K. has sanctioned more than 1,500 Russian individuals and entities. Russian-owned assets worth a combined 18.39 billion pounds ($20.8 billion) have been frozen. The new Economic Crime Act was rushed through parliament in weeks and sought to prevent anonymous ownership of U.K. properties through shell companies. Additional proposed legislation, the Economic Crime and Corporate Transparency Bill, is now being debated in the House of Lords.

But when asked how much progress had been made in actually seizing these frozen assets during the past year, Bullough was forthright: “None. No progress. None at all.”

While government sanctions allow for the freezing of assets, moving to confiscation is “extremely difficult,” according to Helena Wood, a Senior Research Fellow at the Centre for Financial Crime and Security Studies at U.K.-based think tank the Royal United Services Institute (RUSI).

“Sanctions are a quick and dirty tool of foreign policy. We need to find a way to remove these assets from our economy — sanctions are not going to allow us to do that,” Wood says.

According to U.S. attorney Jamison Firestone, confiscating kleptocrats’ assets is difficult because it requires proving that their wealth originates in crimes that may have taken place decades ago. On top of that, governments have to prove that a particular asset was bought with the proceeds of a particular crime — assuming they’re even able to unpick complex ownership structures that often involve secretive trusts.

And experts are quick to highlight loopholes in the existing legislation.

New research published earlier this month by campaign group Transparency International shows almost 52,000 properties in England and Wales are still owned anonymously, despite new legislation requiring offshore companies to declare their ultimate owners. Some 14,000 companies – including some reportedly owned by kleptocrats, oligarchs and sanctioned individuals – have failed to comply with the law.

Ben Cowdock of Transparency International said helpful moves have been made, but there is more to do. Much wealth, for example, is hidden behind opaque trusts.

"The use of trusts in company ownership structures continues to mask the true owners of thousands of properties across the U.K.,” Cowdock says. “To fix this, the government should enable Companies House to publish details of those behind trusts which hide the names of offshore company owners."

Meanwhile, one sanctioned Russian oligarch was granted 60,000 pounds (around $72,000) per week by the U.K. treasury to cover his “basic needs” — something Bullough sees as a “flaw in the sanctions legislation.” And in 2021 Evgeny Prigozhin, the head of Russian mercenary group Wagner, which has committed atrocities in Ukraine and elsewhere, was granted a special U.K. government license that let him pay British lawyers to sue a journalist for defamation — despite the fact that the warlord had already been sanctioned.

‘Dekleptofication’

Since last year, a significant focus of sanctions enforcement has been on freezing eye-catching assets like oligarchs’ mansions, superyachts, and private jets. In March, OCCRP published the Russian Asset Tracker, a project which identified more than $20 billion in assets owned around the world by sanctioned Russian oligarchs and officials.

Wood, the researcher from RUSI’s Centre for Financial Crime and Security Studies, sees Russian-owned assets like these as part of a wider problem of global kleptocracy.

“These buildings represent a selling off of our democracy and our rule of law to kleptocrats beyond Russia, across the whole world, to serve a prosperity agenda,” Wood says as the bus heads South towards Hampstead, an upscale area of North London. “This is not just about Russian assets, this is about the U.K. reversing out of a situation where it has become a global hub of money laundering for the past 30 years.”

As the tour continues through central London, the extent of elite Russian wealth that has been funneled to the U.K. capital becomes ever clearer.

In opulent Belgrave Square, the bus passes a 50-million-pound ($65-million) mansion owned by Oleg Deripaska, a metals magnate whom the U.S. has accused of threatening the lives of corporate rivals, bribing a Russian official, and ordering the murder of a businessman. The front door, boarded up, is partially hidden behind a dead potted tree sitting under the porch. (Deripaska’s representative has denied his involvement in any illegality.)

Experts have called for a new approach to so-called “dekleptofication” – the process by which the U.K. might uncouple itself from wealthy foreign investment that originates in kleptocratic states.

Wood wants to see new laws that would designate kleptocratic assets as a threat to national security and allow for their confiscation on that basis – something she compares to Italy’s anti-mafia laws.

And Firestone wants “fundamental changes to our laws” – including new legislation which would enable Western governments to hand Russian-owned assets to the Ukrainian people as reparations under international law.

Firestone co-founded the law firm FD Advisory in Moscow in the 1990s. In 2009, a Russian employee of his firm, Sergei Magnitsky, was killed in prison after blowing the whistle on a $230 million government tax fraud.

All too familiar with Russia’s approach to law enforcement, he cautions against overzealous asset seizures which could lead to accusations of adopting an approach “no better than the legal system that allowed these people to steal these assets.”

Instead, he calls for new laws which would allow the U.K. government to target Russian Central Bank reserves — some 26 billion pounds ($31.33 billion) that are protected by sovereign immunity, a legal concept which gives sovereign states immunity from civil and criminal lawsuits.

“We have sovereign immunity because we respect the sovereignty of states and international law,” he says. “Putin does not respect these things. We should lift sovereign immunity and give that money to Ukraine.”

New legislation is only part of the solution. Several expert speakers who took the microphone as the tour traveled London, called for greater investment in law enforcement to help tackle economic crime. According to Wood, the government needs to spend 250 million pounds ($300 million) annually to start addressing the problem.

“We absolutely need a proper plan to retool our law enforcement,” Wood says. Otherwise, “we’re going to be doing these tours in 5, 10, 20 years.”

‘An Army of Enablers’

The tour finishes in Westminster, the seat of the U.K.’s parliament. Here, like elsewhere in London, are reminders of the Russian elite’s financial capture of the U.K. capital.

Directly overlooking the Ministry of Defense building, an 11.4-million-pound ($19.3-million), 483-square-meter apartment belongs to Igor Shuvalov, a politician who chairs Vnesheconombank, a Russian state-owned development bank. After serving in various government roles from the late 1990s, including as Putin’s presidential aide, in 2008 Shuvalov was appointed first deputy prime minister and remained in the position for a decade.

According to the Anti-Corruption Foundation of imprisoned Russian campaigner Alexei Navalny, Shuvalov was “instrumental in creating the system of state corruption which has come to dominate the country’s institutions.” Shuvalov was sanctioned by the U.K., EU, and U.S. in early 2022.

Margaret Hodge, a member of parliament for the Labour Party and chair of the All-Party Parliamentary Group on Anti-Corruption and Responsible Tax, believes the U.K. government’s efforts to target Russian oligarchs have not gone far enough.

“Although they have been sanctioned, most of them have evaded and avoided those sanctions by the loopholes which we created in bringing in the legislation. Our ability to capture sanctioned money and property owned by these oligarchs and kleptocrats has been pathetic,” Hodge says.

She describes, in a brief speech at the end of the tour, an “army of enablers” — accountants, lawyers, bankers and corporate services providers — who facilitate money laundering and economic crime.

“Until we tackle those enablers, we will not rid Britain of the ill we’ve got,” she adds.

Today, on the one-year anniversary of the war, a cross-party group of MPs led by Hodge has written to the prime minister, Rishi Sunak, calling for a tougher stance on what she calls “Russian dirty money.” The group highlighted proposed legislation currently going through parliament, the Seizure of Russian State Assets and Support for Ukraine Bill. If passed, it would allow for the seizure of Russian state assets like central bank reserves.

But for now, the tour organizers can only continue to promote their vision of a U.K. uncoupled from kleptocracy from the tour bus. It will be in Westminster’s Houses of Parliament that the country’s future policy will be decided.