The United Kingdom has considered imposing sanctions on Russia over the Ukraine crisis. But Foreign Secretary Liz Truss told the BBC that “there have been concerns in the past with illegal funding in London, which we are clearing up.” Why is it so tough to solve the problem?
What is the value of Russian currency in the United Kingdom?
Many rich individuals and firms from Russia and other countries invest legally in the UK financial and real estate markets.
However, the anti-corruption organization Transparency International has discovered more than £5 billion in the property purchased in the UK with “suspect wealth,” with Russia accounting for one-fifth of the total.
When it comes to property, which can be owned by corporations rather than individuals, information can be difficult to come by.
However, it’s feasible that Russians may eventually possess a large number of properties. Properties that are purchased through corporations are registered in places like the British Virgin Islands (BVI).
In October 2021, a leak of nearly 12 million documents showed the scope of these companies’ use. The leak is Pandora Papers.
It revealed hidden wealth, tax evasion, and money laundering by some of the world’s wealthiest and most powerful people.
Researchers discovered that Russian citizens owned 5% of the offshore corporations that held UK properties, which totaled over 700.
Why is the United Kingdom so appealing to Russian investors?
For wealthy Russians, London has always been a favored place for settling down or purchasing property and assets.
The UK’s “golden visa” – the Tier 1 (Investor) visa scheme – grants residency to people who invest £2 million. Or more in the country, as well as their families.
These visa holders can then seek permanent residency in the United Kingdom. The magnitude of their investment determines the speed with which they can apply :
-With £10 million, you have two years.
-Three years, £5 million
-Five years with a £2m investment
Since the initiative began in 2008, the Home Office has given 14,516 investor visas to Russian citizens.
On the London Stock Exchange, Russian enterprises have also been able to raise huge quantities of money through share sales.
En+ Group, an energy company, was one of the winners. Oleg Deripaska controlled the corporation, a close associate of Russian President Vladimir Putin, at the time of its first public offering.
In 2018, a House of Commons committee urged the government to remedy “gaps in the sanctions framework” that permitted En+ to list on the London Stock Exchange.