The government must ‘strengthen legislation against enablers’ – including lawyers – to stem the tide of ‘dirty money’ flowing into the UK from ‘kleptocratic post-Soviet states and other corrupt foreign regimes’, senior MPs said today.

Illicit wealth has been welcomed ‘without question’ and the government’s failure to pass legislation to tackle the problem ‘is likely to have contributed to the belief in Russia that the UK is a safe haven for corrupt wealth’, the House of Commons’ foreign affairs committee has warned.

The committee welcomed the Economic Crime Act, which establishes a register of beneficial ownership of overseas property and reforms unexplained wealth orders, but said that it is ‘shameful that it has taken a war to galvanize the government into action’.

While the act ‘meets some of the immediate needs to facilitate the UK response to the war in Ukraine, it represents a small proportion of the long-promised measures that will begin to address the UK’s vulnerability to illicit finance’, its report says.

The Foreign, Commonwealth & Development Office should ‘work in concert with other departments to curb professional enablers who wittingly or otherwise help kleptocrats to establish a financial foothold in the UK and to stifle investigation of their affairs’, the committee recommended.

Tugendhat

Committee chair Tom Tugendhat

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‘Law firms are being used by kleptocrats and criminals to suppress evidence of their corruption or protect their reputation through vexatious litigation against journalists and publishers’, the report adds.

Committee chair Tom Tugendhat said: ‘Dirty money brings corruption to our homes and turns our institutions against us. It attacks our society and our security. For far too long successive governments have allowed malign actors and kleptocrats to wash their dirty money in the London “laundromat”. Complacency has left the door open to corrupt wealth taking root and morally bankrupt billionaires using the UK as a safe deposit box.’

He added: ‘While the Economic Crime Act is welcome, it is also long overdue. Current legislation does not go far enough and the government’s rhetoric is not matched by reality. Sanctions against Russian individuals and businesses can only achieve so much. We need much more fundamental – and long-lasting – legislative changes to weed out the scourge of dirty money.’