Ukraine

Baroness Kramer Excerpts

Friday 25th February 2022 Lords Chamber

[Baroness Kramer (LD)]

My Lords, there is one particular lever that we especially control, and that is access to the financial and legal services of the City of London. The Government have taken steps now to begin to ban Russia from accessing those services—I hope the Minister will be able to tell us that they are going much farther than the original announcement. I also understand that actions are being taken in co-ordination with the United States and with financial centres across the EU. But perhaps the Minister could talk to us about the relationship that we have with both Singapore and Hong Kong, with their very active financial centres, and other potential locations that could provide an alternate route and tell us what progress has been made on closing down access on those markets as well.

We also control a lever—I am almost ashamed to say —and that is access to the money laundering capabilities of the City of London, widely known as the London laundromat. We are all aware that London has been washing dirty money from kleptocrats and oligarchs—with strong connections to Putin and his regime—in the hundreds of millions of pounds and, frankly, the Government have gazed on it with a fairly lax eye, promising action, but very little has actually taken place.

The Government have announced that they will freeze the assets of those on the sanctions list—and I hope that includes their networks of family and associates to whom most of the assets have been passed. Liquid assets will already have been moved out of the UK in the past few days. I regret that we were not in a position, apparently, to act earlier and more quickly to prevent the escape of those assets. But most will have disguised ownership and a complex web of shell companies. We know that over £1 billion is settled in London property alone—again, under shell company names—but there is so much more in sports clubs, communications and operating businesses. It really will be a terrible task to unravel it. I join those who take the view that, in many cases, these assets should be seized and not just frozen. I must ask the Minister: are our Crown dependencies and overseas territories adopting the same sanctions? Because if not, we do not have a loophole; we have an escape hatch.

Please can the Minister bring forward, as soon as next week, the Bill for the public register of beneficial owners of property in the UK? I think I am probably not supposed to know this, but this legislation has been drafted and ready to go for weeks. The Government have made the decision not to introduce it and to hold it back as part of a broader piece of legislation; it does not need to be—it can stand alone. It is urgent and could be tackled very rapidly. I am sure both Houses will co-operate. In looking at immediate issues, will the Government support the amendment passed by this House in the National Insurance Contributions Bill for public registers in the freeports to prevent the London laundromat being devolved out across the country? I hope that they will.

Speaking of networks—I talked about family and associates—we also have to bring to book the enablers of money laundering, including the legal firms, the accountants, the banks, the property agents and the developers. That network is laced with respectable names, and many are very well connected throughout the current political establishment. Can the Government tell me: will the new kleptocrat unit in the National Crime Agency also be tackling these enablers and tackling them vigorously? If this unit is to be more than a gimmick, it has to be properly staffed, it has to have strategy and goals, it has to have priorities, and I am told that none of these is currently in place—if I am wrong, I would appreciate the comments of the Minister. To empower this unit to go after the enablers, will the Government commit immediately to introduce “failure to prevent” legislation? We have templates from other Bills—the drafting would be a matter of hours.

I hear that the Biden Administration have engaged intently over recent weeks with US companies that will be impacted by economic sanctions, making clear their intentions and assisting in mitigation. The companies I have talked to do not report the same engagement in the UK, but perhaps my vision is too narrow. Have the UK Government been doing the same? And since I am focusing on finance, have they met with the key players in the City of London, both to use their expertise in shaping sanctions and to give them a clear view of their intentions so that they are prepared to act and to act quickly and effectively? Could the Minister perhaps tell us which players have been involved in such discussions with regard to finance—regulators, banks, insurance companies, fintechs, et cetera?

While it will take an international decision, are the UK Government totally committed to closing Russia out of SWIFT—the international money transfer system? That is probably the most effective tool of all to show Russia its pariah status. But our companies in our country will need mitigation to cope with the consequences of that, and is that planned?

UK firms will be hit by the effect of sanctions, some devastatingly. The UK population, especially the poorest, will be hit by a spiralling cost of living. Will the Government have a rescue fund, and other mitigations, for SMEs that are hurt, and also will they look at the damage to the UK population and now increase universal credit and cancel the rise of the national insurance contributions uplift?