Liz Truss, the British foreign secretary, has said Russian oligarchs and key supporters of Vladimir Putin will be targeted by UK sanctions if Russia invades Ukraine, but left Britain’s existing much-criticised anti-corruption laws largely untouched.
Insisting that the Russian president’s allies would have nowhere to hide their assets if an invasion went ahead, the Foreign Office, clearly working in lockstep with the US, threatened to seize the wealth of Putin’s inner political circle and business backers.
Boris Johnson travels to Ukraine on Tuesday to meet President Volodymyr Zelensky as he pledged £88m of new funding to “support stable governance and energy independence”. Ahead of the visit, Johnson said: “It is the right of every Ukrainian to determine how they are governed. As a friend and a democratic partner, the UK will continue to uphold Ukraine’s sovereignty in the face of those who seek to destroy it.
“We urge Russia to step back and engage in dialogue to find a diplomatic resolution and avoid further bloodshed.”
Johnson’s efforts to take a leading role in the crisis were dealt a blow when he had to cancel his scheduled call with Putin so he could answer questions in the Commons about the Gray report into parties in Downing Street.
No 10 tried to reschedule the call, but Moscow said it was not possible, leaving Johnson to say he would speak to the Russian president as soon as a time could be agreed.
The Biden administration has drawn up a list of potential sanctions targets among Russian oligarchs and their families, who Washington deems to be in the Kremlin’s orbit or “complicit in the Kremlin’s destabilising behaviour,” according to a US official quoted by Reuters news agency.
“Putin’s cronies will no longer be able to use their spouses or other family members as proxies to evade sanctions”, the official said. “Sanctions would cut them off from the international financial system and ensure that they and their family members will no longer be able to enjoy the perks of parking their money in the west and attending elite western universities.”
US officials would not provide names, but said sanctions targets were vulnerable because of their investments and residencies in the west.
Truss, giving a statement to MPs on Monday, also refused to name any individual Russians at risk of being sanctioned, saying the aim was to create the maximum anxiety among Putin’s allies.
Truss said the new legislation, which will be in place by 10 February, would be the “toughest sanction regime against Russia we have ever had”, and would give the UK “the power to sanction a broader range of individuals and businesses”.
She said the package meant the UK “can target anyone providing strategic support close to Vladimir Putin”.
Labour criticised the package for failing to speed up the long-promised structural measures to tackle money laundering in the UK, including measures first announced by David Cameron in 2014 and 2015.
David Lammy, the shadow foreign secretary, said: “The proposals need to be part of a coherent policy.
“For years, Labour has raised the alarm about the role of dirty money in keeping Putin in power. Warning after warning, report after report, the government has been asleep at the wheel. London is the destination of choice for the world’s kleptocrats. We are the home to the services and the enablers that help corrupt elites to hide their ill-gotten wealth.”
Russia described the transatlantic measures as extremely alarming and likely to damage the business climate in the UK.
The net of those potentially subject to sanctions in the UK is being widened in the event of an invasion by making Russians and companies supportive of Putin liable to travel bans and asset freezes. Previously, only individuals regarded as guilty of destabilising the sovereignty of Ukraine could be sanctioned, although the UK can and has sanctioned Russians for human rights abuses and corruption.
Currently, 180 Russian individuals and 48 entities are subject to UK sanctions, more than half linked to the destabilisation of Ukraine.
Truss, who is due in Moscow for talks in the next fortnight but will not be travelling to Ukraine this week after testing positive for Covid on Monday, told MPs the proposals meant the UK would be able to act in lockstep with the US. “Whether you support Russia’s aggressive actions against Ukraine, or you’re of wider significance to the Kremlin, we will have the power to sanction you,” she said. “Nothing is off the table and there will be nowhere to hide.
“This will amount to the toughest sanctions regime against Russia we have had in place yet, and mark the biggest change in our approach since leaving the European Union.”
The reference to nothing being off the table was designed to show that the government has not abandoned other structural measures. These include reforms of Companies House, a register of properties held by overseas citizens and a public register of beneficial ownership in the British overseas territories – measures that have been repeatedly promised but held back as a result of opposition from the City of London. Some of the stiffest opposition is coming from Gulf states and not Russia.
An economic crime bill containing many of the measures looks likely to be delayed, a move that has infuriated the government’s own anti-corruption tsar, John Penrose. In the House of Lords on Monday, ministers were challenged about their personal links to firms operating in tax shelters.
John Heathershaw, co-author of a recent Chatham House report on “Britain’s kleptocracy problem”, said: “The use of sanctions here appears to be as an ad hoc and preventive measure – essentially as a form of deterrence. The reason such measures are necessary is that there is already a great deal of money in the UK from Russia which has been welcomed by UK banks, estate agents, football clubs and companies with minimal checks on the sources of wealth and beneficial ownership. The problems that led to the UK welcoming suspicious Russian wealth are structural British problems.”
Putin’s spokesperson, Dmitry Peskov, described Truss’s package as an “extremely alarming” statement that “undermines investment attractiveness and the United Kingdom’s attractiveness as such”. “It’s not often you see or hear such direct threats to attack a business,” he told reporters.
He added that Moscow would “proceed from its own interests when formulating retaliatory measures”. “An attack by one particular country on Russian business of course implies retaliatory measures,” he said.
The Russian ambassador to the UK, Andrei Kelin, stressed that the UK was now pursuing an “aggressive line” in Europe regarding Ukraine. He said the exaggeration of the “Russian threat” was being stoked by Britain’s domestic problems.
Russia last week expanded its blacklist of EU and member states’ personnel on a no-fly list who Russia said “were personally involved in promoting anti-Russian policy”.