This article was written by John Penrose and originally published in The Times
The West’s answer to Russian aggression in Ukraine is pretty clear: if you invade Kyiv then it won’t just turn into the kind of guerrilla-war quagmire that exhausted and humiliated you into leaving Afghanistan years ago. We will also make you permanently and dramatically poorer, and then hamstring your ability to spend any cash that we’ve missed in our countries afterwards too. For a regime that’s built on a network of favours to oligarchs and cronies who’ve got rich at taxpayers’ expense, being unable to line the pockets of its supporters could be a death knell.
But the West’s threats won’t work if Putin doesn’t believe we’re serious, which is why the global financial markets based in the City of London are central to what happens in Ukraine. The square mile is an amazing, brilliant economic asset for Global Britain, but it’s also a magnet for dirty cash. Even if only a tiny fraction of the billions that slosh through the City’s trading floors every day is illicit, it’s still big money. And since the City’s success depends on Britain’s reputation as an honest, rules-based, free-trading country, anything that corrodes our brand is lethal.
So the we’ve got to close any loopholes that let Putin’s oligarchs – to say nothing of an unsavoury ragbag of kleptocrats robbing other countries blind, and old-fashioned organised crime lords, drug smugglers and gun-runners too – launder their dirty cash through global financial markets and then, once it’s squeaky-clean, buy themselves posh London apartments and go shopping at Harrods.
The most important change is extra transparency, so anyone who owns UK property or controls a British company will have to come clean about who they really are. That will mean anyone in the UK, or in a country like Russia, will be able to ‘follow the money’ back to its source. And if you can follow the money, you can grab it from an oligarch, hitting them where it hurts most – in the wallet.
How should we do it? Well the upcoming Economic Crime Bill is essential to plug the legal loopholes which the oligarchs and their lawyers know how to exploit. Plus more sanctions on Russian crooks and companies. And we need to spend a lot more time and money policing online fraud and money transfers because, while our public political debate is still stuck in a 1980s time-warp where everyone ritually demands more ‘bobbies on the beat’, the criminals have moved on. Old fashioned crimes like physically breaking into bank vaults have become quaintly old-fashioned bits of criminal history, so our law-enforcement has to keep up to date too. We need more ‘bobbies behind a screen’, sleuthing on digital highways rather than pounding a physical street.
In other words, the West’s threats about Ukraine won’t work unless Putin and his oligarchs know that it won’t be business as usual for them in London. We are eyeball-to-eyeball at the moment and, if we blink, they will conclude that perhaps we Brits weren’t terribly serious about all this in the first place. And then their tanks will be free to roll.