In government, words come cheap, but it is deeds and actions that count. Judged by the threats that Boris Johnson and his ministers make against Russia over Ukraine, you might think that Britain is fully equipped to turn its warnings into deeds. Not so. When it comes to something British ministers really could control, however, like targeting the assets of Kremlin-backed oligarchs and staunching the flows of Russian-tainted money laundered through the City of London, the rhetoric runs into the sand. In this sphere, Mr Johnson’s government does the exact reverse of what is needed. It speaks loudly, but it carries a flimsy stick.
Now, there is some prospect of action. The UK is reported to be ready to abolish its “golden visa” regime within weeks. But why so late? And how effective will this reform really be now? The fear is that it is too little, too late and too ineffectual, and that it will prove another underresourced performative stunt designed to create an impression, not achieve a material economic goal.
The investor visa scheme, launched in 1994, under which foreign nationals must show they have at least £2m ready to invest in the UK, has been one of the keys to opening up Britain as a safe haven for dirty money from Russia – and from elsewhere too (in 2021 more than twice as many golden visas were issued to Chinese nationals than to Russians). The scheme did not just bring in money. It became the seedbed for an industry of UK enablers – including lawyers, accountants, estate agents, security specialists and lobbyists – to help integrate Russian oligarchs and others into many levels of British life, including the Conservative party. Some of the golden visa scheme’s conditions were tightened in 2015 and 2019.
There has been no lack of calls for stronger action, and repeated evidence that ministers do not see this as a priority. Yet economic crime is not just theft. It is also a national security issue. In 2018, the Commons foreign affairs committee warned that Britain was not serious about the subject. In 2020, the intelligence and security committee said that London “offered ideal mechanisms by which illicit finance could be recycled through what has been referred to as the London ‘laundromat’”. Only last month, the Treasury minister Lord Agnew resigned in frustration because a much-delayed economic crime bill has been left out of the next Queen’s speech.
That decision shows where the government’s priorities lie. In the tension between its prosperity agenda and security against Russia and other threats, it is the Treasury – and the Tory party treasurer – that too often gets the last word. In January, a US thinktank warned that any US-UK counter-kleptocracy drive would be hampered by the close ties between Russian money and elite UK institutions, including the Tory party. This week, the former Tory minister Lord Faulks told the Guardian that Britain had become a laughing stock as a result of “a deluded desire to protect the City of London”. The recent shift towards renewed deregulation in the internal balance of power in the Tory party suggests that this will not change soon.
Yet it should. Action against the City’s role in money laundering is massively overdue. But the abolition of golden visas is a gesture, not a strategy. It is a scattergun approach affecting all foreign nationals of whatever background, when what is really needed is a ruthless and properly resourced targeting of assets and investors with links to hostile regimes like Russia. If Ukraine is invaded, the case for action will be even stronger. But the measures need to be effective and thorough to have any effect now.
