The fall of “Londongrad”, an oasis for Russian oligarchs and their dirty money

For many years Great Britain has been a safe haven for Russian oligarchs, a place where their not-so-clean money could be funneled into the purchase of real estate, art and other assets that are most commonly used for money laundering.

Everything has changed after February 24, 2022, when Russia began its unprovoked full-scale aggressive war against Ukraine, bombing Ukrainian cities, killing countless civilians, ruining civilian infrastructure, and pushing Europe and the whole world closer to the edge of the Third World War.

Since Vladimir Putin has started his bloody war against Ukraine, the United Kingdom has proven its status as a truly global actor, which will stand up for democracy and the rule of law, even if democracy has been put in harm’s way in a distant country in Eastern Europe.

Thus, the days of “Londongrad” are finally over. The term dates to the period after the collapse of the Soviet Union. Due to a liberal visa policy, London became a magnet for Russians who had acquired enormous wealth through privatization of once state-owned numerous Soviet factories and industries.

Since the annexation of Crimea in 2014, every British government have made commitments to hold Russia responsible for the aggression against Ukraine. In 2021, a House of Commons committee described the London financial center as a “laundromat” for dirty Russian money. In 2022, it was estimated that the British real estate worth 1.5 billion pounds was owned by Russians accused of corruption or belonging to the Kremlin’s power circle. Many of the aforementioned individuals now subject to sanctions.

A few months ago, the Times magazine made it public that numerous Russian oligarchs had simply signed over their villas to their wives or children. Nevertheless, a lot has changed in Great Britain since February 24, 2022. Many Russians have withdrawn their assets since British government has finally taken measures that it should have taken long ago.

Specifically, the government created more transparency around the ownership of real estate. In Great Britain, real estate is an asset of choice for foreigners who want to invest their money of dirty origin. Apartments and villas can easily be filled with art, expensive furniture or other valuables. In 2015, investigative journalists from the TV station Channel 4 showed in the documentary “From Russia with Cash” how London real estate agents turned a blind eye even to the obvious criminal origin of their customers’ money.

So far, the oligarchs have been able to hide behind offshore companies, for example in the British Virgin Islands, which acquired the properties in their name. Such companies must now be registered in Great Britain, which promotes transparency regarding the final beneficiaries. Identity controls are also being tightened when setting up a British company, but not so long ago, a few clicks on a website were enough.

However, there is of course a loophole in the new rules: since trusts, unlike companies, are not subject to the same strict legal regulations, rich foreigners are now increasingly hiding behind lawyers and trusts instead of shell companies.

In 2022 the National Crime Agency temporarily detained Russian-Israeli businessman Mikhail Fridman following a raid in north London . In the fall of 2023, however, the investigators had to drop the accusation of circumventing the sanctions and stop the proceedings. Nevertheless, Fridman has turned his back on the country.

The insiders in the NAC commented that investigators are afraid of being drowned in lawsuits by the oligarchs’ aggressive lawyers, especially since they have more funds at their disposal for legal disputes than the authorities.

Nevertheless, the sanctions imposed in close coordination with the USA and the EU have not failed to have a deterring effect on Russia and Kremlin’s inner power circle.

The blocking of Russian funds is a part of Western support for Ukraine in the war against Russia. It would be irrational to send so many weapons and money to Ukraine and at the same time indirectly finance the Russian regime.

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