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IIn government, words are cheap, but actions and deeds count. Judging by the threats Boris Johnson and his ministers are making against Russia over Ukraine, one would think Britain is well-equipped to act on its warnings. Not so. However, when it comes to something British ministers could really control, like targeting the assets of Kremlin-backed oligarchs and stemming the flows of Russian-tainted money being laundered through the City of London, the rhetoric comes to nothing . In this area, Mr Johnson’s government is doing exactly the opposite of what is needed. It speaks loudly, but it carries a thin stick.
Now there is some prospect of action. Britain is said 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 ineffective, and that it will prove to be yet another underfunded performative stunt designed to make an impression rather than achieve any material economic goal.
The investor visa system, introduced in 1994, which requires foreign nationals to show they have at least £2m ready to invest in the UK, was one of the keys to opening Britain up as a safe haven for dirty money from Russia – and from Russia elsewhere too (in 2021, more than twice as many golden visas were issued to Chinese nationals than to Russians). The program didn’t just bring in money. It became the nucleus for an industry of British pioneers – 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 terms of the Golden Visa Scheme were tightened in 2015 and 2019.
There has been no shortage of calls for stronger action and there has been repeated evidence that ministers do not see this as a priority. But white-collar crime is not just theft. It’s also a national security issue. In 2018, the Commons Foreign Affairs Committee warned that Britain was not serious about the issue. In 2020, the Intelligence and Security Committee said that London “provides ideal mechanisms for illicit finance to be recycled through what is known as London’s ‘laundromat'”. Just last month, Finance Secretary Lord Agnew resigned in frustration that a badly delayed white-collar crime bill was left out of the Queen’s next speech.
This decision shows where the government’s priorities lie. In the tension between its prosperity agenda and security against Russia and other threats, the Treasury – and the Treasurer of the Tory Party – all too often has the last word. In January, a US think tank warned that any US-British anti-kleptocracy campaign would be hampered by the close ties between Russian money and elite British institutions, including the Tory party. This week, former Tory minister Lord Faulks told the Guardian that Britain has become a laughingstock because of “a delusional desire to protect the City of London“. The recent shift towards renewed deregulation of the internal balance of power in the Tory Party suggests this is not about to change.
And yet it should. Measures against the city’s role in money laundering are massively overdue. But the abolition of the golden visa is a gesture, not a strategy. It’s a scattergun approach that affects all foreign nationals, regardless of background, when the real deal is a ruthless and properly resourced target of assets and investors with ties to hostile regimes like Russia. If Ukraine is attacked, the arguments for action will be even stronger. But the measures must be effective and thorough in order to have an impact now.
