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Boris Johnson has Left an ‘Oligarch Loophole’ in the Economic Crime Bill

The Government’s ‘crackdown’ on money-laundering by Russian oligarchs has a large loophole which will allow some oligarchs to be exempted, reports Adam Bienkov

The Foreign Secretary Liz Truss. Photo: Maxim Shemetov /REUTERS

Johnson has Left An ‘Oligarch Loophole’ in the Economic Crime Bill

The Government’s ‘crackdown’ on money-laundering by Russian oligarchs has a large loophole which will allow some oligarchs to be exempted, reports Adam Bienkov

The Government will on Monday bring forward its Economic Crime Bill, which it says will crack down on money-laundering by Russian oligarchs and make it easier to freeze their assets in the UK.

Foreign billionaires are currently able to anonymously own land and other assets in the UK, enabling them to launder money into the country.

However, the long-delayed Bill contains a large exemption that could allow some Russian oligarchs to be exempted from the register.

This clause allows individuals or their assets to be exempted if doing so would be “in the interests of the economic wellbeing of the United Kingdom.”

Economic Crime (Transparency and Enforcement) Bill

This means that oligarchs could be excluded from the register if they are able to convince ministers that it is in the UK’s economic interest for their identities to remain confidential.

It is unclear how this exemption would be used in practice. However, the Government’s opponents argue that it could, in theory, allow some oligarchs who are closely connected to the Government to argue that transparency would force them to remove their assets and thereby hurt the economy.

The Liberal Democrats will on Monday bring forward an amendment to the bill designed to close this “oligarch loophole”.

“We’ve been told for weeks that Putin’s cronies would have ‘nowhere to hide’, yet contained within this Bill is the perfect opportunity for them to do just that”, Liberal Democrat Foreign Affairs Spokesperson Layla Moran MP said.

“The immense lobbying powers of Kremlin-linked oligarchs and their enablers has been well documented. They must be rubbing their hands in glee that this legislation is soft touch and easily exploitable.”

The Labour Party is also calling on the Government to amend the bill to remove another clause that would allow oligarchs a six months grace period before having to declare their assets. The Government had initially proposed that they should be given 18 months before having to comply.

Labour say that this will hand oligarchs a “get out of London free card” allowing them to move their money out of the country before being hit by any asset freeze, and suggest it should be cut to just 28 days.

“It’s not good enough that the Government want to give Putin’s cronies months to sell up and escape sanctions”, Shadow Business Secretary Jonathan Reynolds Labour said.

“The invasion of Ukraine and continued Russian aggression demands action now, not in six months’ time.”

In comments released by Downing Street on Sunday, the Prime Minister defended the Bill saying that: “Punishing sanctions are meaningless until properly implemented, and these changes will allow us to pursue Putin’s allies in the UK with the full backing of the law, beyond doubt or legal challenge”.

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