Furious MPs demanded an end to the London “laundromat” which allows “dirty Russian” cash to flow through the City today after Vladimir Putin’s troops invaded Ukraine.
Boris Johnson announced sanctions against three billionaire oligarchs and five banks in retaliation for Kremlin forces launching action in the breakaway regions of Luhansk and Donetsk.
The Prime Minister told the Commons: “Any assets they hold in the UK will be frozen, the individuals concerned will be banned from travelling here, and we will prohibit all UK individuals and entities from having any dealings with them.
“This is the first tranche, the first barrage, of what we are prepared to do.
“We will hold further sanctions at readiness, to be deployed alongside the United States and the European Union if the situation escalates still further.”
Critics blasted the move after it emerged the oligarch trio have been on a US sanctions list since 2018 - meaning it is unlikely many UK businesses have dealings with them.
Mr Johnson insisted the Government would “be bringing forward further measures to hit Russian individuals and Russian companies of strategic importance to Russia, stopping Russian companies from raising money on London markets and stopping them even trading in pounds and dollars”.
Keir Starmer said: “We have failed to stop the flow of illicit Russian finance into Britain.”
Calling for the invasion to be “a turning point”, the Labour leader added: “We need an end to oligarch impunity, we need to draw a line under Companies House providing easy cover for shell companies, we need to ensure that our anti-money-laundering laws are enforced.”
Former Treasury Minister Dame Angela Eagle questioned whether the sanctions would “close down the so-called London laundromat which is laundering dirty Russian money straight through the City”.
MPs have become increasingly frustrated at the failure to crackdown Russia on cash swirling around the capital.
Mega-rich, Kremlin-linked tycoons have bought multi-million-pound mansions in London and country estates in Surrey, sending their children to elite boarding schools.
Ministers have repeatedly been accused of turning a blind eye or even encouraging them because of the funds they pump into the UK economy.
MPs on Parliament’s Intelligence and Security Committee published a damning report in July 2020 accusing successive governments of paving the way for Russian funds to infiltrate Britain.
“It would appear that the UK has been viewed as a particularly favourable destination for Russian oligarchs and their money,” the 55-page study said.
“The UK welcomed Russian money, and few questions – if any – were asked about the provenance of this considerable wealth.”
Shadow Home Secretary Yvette Cooper tonight said Britain had become a “centre for illicit finance that reality discredits us in the eyes of the world”.
She demanded “much stronger action against illicit finance in the City of London, and the way in which - not just Russian money and illegal money,
including money from organised crime in other countries - it’s possible to launder that money in the UK because there just aren’t strong enough checks in place”.
Former Foreign Office Minister Chris Bryant, who chairs the All-Party Parliamentary Group on Russia, fumed: “We have to close the dirty Russian money down.”
Exeter University academic Tena Prelec, part of a research team investigating international kleptocracy, said: “Our research shows elite individuals from post-Soviet states are laundering their wealth and reputations in the UK, knowingly and willingly supported by a network of British professionals.
“The UK remains a safe haven for dirty money, a great deal of which comes from Russia and Eurasia.
“Failure to tackle this thriving billion-dollar industry is damaging for the UK’s rule of law and to the UK’s professed role as an opponent of international corruption.”
Campaigner Bill Browder, the head of Global Magnitsky Justice campaign, branded the Government’s sanctions “pretty tepid”.
He added: “We should be going after the 50 oligarchs who look after Putin’s money.”
He said: “We don’t have a beef with the Russian people, we have a beef with Vladimir Putin and the oligarchs who support him and the oligarchs who look after his money.
“We don’t have to punish the entire Russian population at this stage of the game - we should be going after the 50 oligarchs who look after Putin’s money.
“Putin is one of the richest men in the world, he’s stolen an enormous amount of money over the last 20 years, and he doesn’t hold that money in his own name, he has other people holding it for him - his oligarch trustees.
“It’s pretty straightforward, if we were to sanction the 50 oligarch trustees who hold Putin’s money and their family members in the UK, he wouldn’t invade Ukraine.
“We know exactly who they are, Boris Johnson knows who they are, the Foreign Office knows who they are, the Home Office knows who they are, I know who they are.
“It’s all just a question of political will - does the Government want to actually stop a war? Or do they just want to seem to be reacting to this?”
Royal United Services Institute think-tank financial and security expert Tom Keatinge said of the UK sanctions: "We've taken a peashooter to a gunfight.
“It doesn't make any sense to me at all, the whole point of the sanctions has been to deter Putin and if at the first chance you get to use these sanctions you only tickle his feet, what's the point?
“If we ever had the upper hand, we've lost it today."
Meanwhile, calls mounted for Russia to be stripped of the UEFA Champions League final.
St Petersburg is due to host the European club game’s showpiece event in May.
But Mr Johnson told MPs it was “inconceivable” Russia could now stage major sporting fixtures.
There was “no chance” of holding football tournaments in a Russia that “invades sovereign countries”, he told MPs.
