City has “responsibility” to tackle dirty Russian money, says top MP
The City must get its house in order over dirty Russian money filtering through the system, one of the rising stars of the Conservatives has said.
Tom Tugendhat, who chairs the influential Foreign Affairs Select Committee and has recently set up a cross-party Russian Coordination Group, told City A.M. that while much of the responsibility for dealing with this growing threat lay with regulators and the government, the industry must also take on some of the burden.
He urged City firms to go deeper with due diligence and make better use of technology to track where money going through clearing houses was coming from, noting there was “a range” of measures that could be deployed.
“The City has a responsibility and an interest in getting dirty money out,” he said. “Probity is at the heart of the City, most obviously in legal system which underwrites contracts around the world. Its absolutely in the Citys interest that its not only clean, but that its seen to be clean.”
Although Russian cash of dubious origin is not a new phenomenon in London, Tugendhat said it was “much more serious” now. “With the spread of corruption to the heart of the Kremlin this isnt a tax issue, its a national security issue,” he said. “And its no longer somebody elses problem, its very much ours”.
The MP for Tonbridge and Malling, who is viewed as a future Cabinet contender, pointed to recent sanctions imposed by the US – on individuals such as Oleg Deripaska – as having had a greater impact. This “calls into question some decisions UK regulators took” previously, he noted.
Tugendhat's committee is investigating what action the UK government can take, and he expects to push for further targeted sanctions that would limit certain Russian companies access to Londons capital markets, which they have relied on in the past.
The former lieutenant colonel, who has already raised this issue with the Prime Minister and her foreign secretary Boris Johnson, is also calling for “a whole-of-government review examining all facets of our relationship with Russia”.
Earlier this week the Commons passed the so-called Magnitsky Amendment to the Sanctions and Money Laundering Bill, which will allow the government to impose sanctions on individuals who commit gross human rights violations.
The amendment, named after an anti-corruption lawyer who died while in custody where hed been held without trial for 11 months, is not specifically aimed at Russia but it comes during a time of strained relations between the two countries in the wake of the nerve agent attack on former spy Sergei Skripal in Salisbury.
Following Theresa May's success in convincing numerous allies, including the US and Germany, to expel Russian spies following this attack, the UK is now planning to use a series of international summits to call for a joint strategy to combat Russian disinformation.
But the Russian embassy has warned against such efforts,slamming the Russian Coordination Group as "another Russophobic campaign launched by the Conservative government," adding that it "may lead to a further deterioration of our relationships".
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