Commons Sense

House of Commons · Westminster Hall

War in Ukraine: Illicit Finance

17 November 2022 · 8 other contributors · 13,031 words

Opened by Bob Seely Con Isle of Wight

Responding minister: Leo Docherty

UkraineTaxationForeign Affairs

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Bob Seely raised concerns about war in ukraine: illicit finance in Westminster Hall. A government minister responded.

Key points

  • The UK and its offshore territories have historically allowed the transfer and concealment of illicit wealth, granting protections to high-risk individuals.
  • The flow of illicit wealth from the former Soviet Union through UK shell companies to tax havens is estimated at between 500 billion and 1 trillion.
  • Property purchases in Great Britain worth nearly 5.5 billion via offshore shell companies have exacerbated housing shortages and inflated property prices.

Key requests to Government

Close the loopholes in Companies House, better resource economic crime enforcement bodies, better supervise professional enablers so they cannot operate outside of money laundering regulations, and expand UK regulations to British overseas territories. The Government should also consider a draft law for taking frozen assets from sanctioned individuals and using them for Ukraine's reconstruction.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Bob Seely Con Isle of Wight

The UK and its offshore territories have for too long turned a blind eye to the transfer and concealment of illicit or semi-illicit wealth, granting political and judicial protections to high-risk individuals undeserving of such protections. The flow of illicit wealth from the former Soviet Union via corrupt German and Scandinavian banks, through UK shell companies, to tax havens is estimated at between £500 billion and £1 trillion. This includes property purchases in Great Britain worth nearly £5.5 billion via offshore shell companies, exacerbating housing shortages and contributing to inflated property prices. The National Crime Agency estimates that money laundering costs the UK £100 billion annually, with serious or organised crime costing £37 billion.

Other contributors (8)
  • Alyn Smith SNP Na h-Eileanan an Iar

    The SNP supports the report and urges the government to implement its recommendations with more ambition. London, Edinburgh, and other UK financial centres need to address the issue of dirty money. The Scottish Government cannot regulate Scottish Limited Partnerships, leading to unclear ownership in the highlands. A review is needed for golden visas, and greater transparency and due diligence are required regarding overseas territories. Professional enablers like PR professionals, lawyers, accountants should be expected to improve their standards against facilitating malfeasance. Companies House needs more resources and powers to act as an active regulator.

  • Catherine West Lab Hornsey and Friern Barnet

    Called for action against illicit Russian finance, highlighted the impact of 'Londongrad' on property prices in London, criticised the Government's response as insufficient, and urged for more funding to combat money laundering and enforce changes. Asked the Minister to clarify the Home Secretary's statement about visas being sold, noting a difference in language used.

  • Fleur Anderson Lab Putney

    The hon. Member speaks powerfully about the necessity of a ratcheting up of international sanctions, with seizing assets rather than just freezing them, and cites the $38 billion budget gap Ukraine faces.

  • Gareth Johnson Con Dartford

    The hon. Member for Isle of Wight highlighted the issue of property prices being inflated due to money laundering, which contributes to mortgage struggles for many people in London and the south-east.

  • Jim Shannon DUP Strangford

    Congratulates the hon. Gentleman on bringing forward this debate and supports using seized Russian oligarchs' money for direct aid to Ukraine, suggesting poetic justice. Jim Shannon commended the contributions of other MPs and thanked the Foreign Affairs Committee for their findings. He highlighted that the UK was underprepared to combat illicit finance from Russia, emphasizing the need for a transatlantic partnership and more proactive measures against corrupt regimes. He mentioned Transparency International's report identifying over £1.5 billion in UK property owned by Russians accused of financial crime or linked to the Kremlin, suggesting this amount should be used to aid Ukraine's reconstruction efforts.

  • Jonathan Djanogly

    My hon. Friend's case is powerful and addresses the need for confiscation sanctions instead of freezing sanctions to use seized funds for Ukraine's reconstruction.

  • Mary Robinson Con Rochester and Strood

    Ms Robinson highlighted the need to protect whistleblowers who uncover corruption, noting that Russian money is being laundered through the UK potentially funding the war in Ukraine. She welcomed the Foreign Affairs Committee's recommendation for a Whistleblowing Bill but noted limitations with current legislation and called for an office of whistleblower standards.

  • Neil Coyle Lab Bermondsey and Old Southwark

    The hon. Gentleman is making an excellent speech, highlighting that illicit finance extends beyond Russia to include Chinese entities in his constituency inflating property prices. The hon. Member for Bermondsey and Old Southwark (Neil Coyle) highlighted the need for implementing beneficial ownership rules, reforming Companies House to verify information, and improving enforcement measures like unexplained wealth orders. He criticised the tepid Government response and called for stronger actions such as greater resourcing of law enforcement agencies and review timelines for whistleblower protections and sanctions implementation. Inquired about Russian nationals receiving tier 1 visas despite being under investigation for national security risks, demanded a conclusion date for the review of these 6,000 individuals.

Government Response

Leo Docherty

It is a pleasure to serve under your chairmanship, Mr Efford, and to respond to the debate on the Government's behalf. I thank all Members for a constructive and useful debate. I am grateful to my hon. Friend the Member for Isle of Wight (Bob Seely) for leading the debate. We are grateful to the members of the Foreign Affairs Committee for producing this extremely useful report, and we regard it as a serious and useful piece of work that requires our urgent attention. We have introduced legislation to tackle the use of cryptocurrencies in sanctions and reforms to Companies House to improve transparency over UK companies and properties. We are committed to protecting free speech and addressing SLAPPs through legislative definition and an early dismissal process supported by a formal cost-protection scheme. Tier 1 investor visas are now closed, and we are finalising a review with plans for a safe and sustainable approach that ensures settlement must be earned. Since the start of Putin's invasion of Ukraine, over 1,200 individuals and 120 entities have been sanctioned, including Russia's major banks and more than 120 oligarchs. We have established a permanent sanctions directorate with over 100 staff by the end of this financial year to ensure effective enforcement. The NCA has increased its budget, and we are investing £400 million over the spending review period in economic crime initiatives. We have made progress on public registers of company beneficial ownership across Crown dependencies and overseas territories, with Gibraltar's register already operational and others working towards implementation. We hope this reassures people that London and the UK are no place for dirty Russian money.

▸ Assessment & feedback
Summary accuracy