US officials have warned that sanctions again Russia’s president Vladamir Putin will not work, because Russian money is too entrenched in “Londongrad”.
Diplomatic sources said US State Department officials had expressed “dismay and frustration” at the British government’s failure to take tough action against the flow of Russian funds, particularly in the capital.
“The fear is that Russian money is so entrenched in London now that the opportunity to use it as leverage against Putin could be lost,” a source in Washington said. “Putin doesn’t hold his money abroad, it is all in the kleptocrats’ names and a hell of a lot of it is sitting in houses in Knightsbridge and Belgravia right under your government’s noses.”
This week a report by the Centre for American Progress proposed a transatlantic effort “to prod stronger action from the UK government”. The report said: “Uprooting Kremlin-linked oligarchs will be a challenge given the close ties between Russian money and the ruling Conservative Party, the press and its real estate and financial industry.”
The government has been accused this week of quietly dropping an Economic Crime Bill that would have exposed kleptocrats’ use of shell companies to buy UK property.
The Conservative Party has received at least £2m from donors with Russian links since Boris Johnson became prime minister in 2019.
The report added that Russian money had dramatically distorted London’s property market and spawned an industry of what it calls “enablers”: lawyers, accountants, PR executives and estate agents looking after them.
Russian money has become so embedded in London that in 2014 when Russia invaded Ukraine, an early government briefing argued that Britain should “not support, for now, sanctions… or close London’s financial centre to Russians” for fear of the economic fallout.
