15/02/22

UK: Government prepares to target billions buried by Putin’s oligarchs in British tax havens.

​As published on inews.co.uk, Tuesday 15 February, 2022.

British tax havens are in talks with the Government over freezing the assets of Russian oligarchs close to Vladimir Putin who have tucked billions away in offshore accounts, i can reveal.

Foreign Office and Treasury officials have asked Britain’s overseas territories and Crown dependencies to be ready to act quickly should they be required to freeze the assets of oligarchs suspected of having close ties to the Russian president if he gives the order to invade Ukraine.

As Western leaders warn of an invasion within days, the Government is attempting to ensure they co-operate on identifying Russian individuals and businesses that may have hidden “dirty money” offshore.

Senator Ian Gorst, Jersey’s minister for external relations and financial services, told i: “We are in dialogue with UK officials on this important issue and will respond swiftly and appropriately to international developments.”

He said that the Channel Island would “maintain a position of full alignment with the UK, and other international partners, in supporting measures that seek to encourage Russia to de-escalate and engage in dialogue to find a diplomatic resolution”.

Senator Gorst added: “Jersey continues to work in close and constant cooperation with the UK on the fast and effective implementation of international sanctions.

“This properly reflects the Island’s constitutional position, and it is why Jersey enjoys an excellent record for implementation of all UK sanctions against countries, regimes or individuals believed to be violating international law.”

The 14 British overseas territories, including the British Virgin Islands and Cayman Islands, and the three Crown dependencies, are required to implement any international sanction of the UK. After the Government strengthened the Sanctions and Anti-Money Laundering Act 2018, “friends of Putin” with cash in British tax havens will be legitimate targets.

The UK can now sanction not just those linked directly to the destabilisation of Ukraine, but also individuals close to the Russian government and businesses of economic and strategic significance to Mr Putin, as well as their owners, directors and trustees.

Jersey’s neighbour Guernsey said it was also able to act quickly on sanctions should it be required.

A spokesman for the States of Guernsey said: “The Bailiwick of Guernsey has a robust and up to date sanctions framework and is able to implement sanction measures quickly.

“Sanctions are important tools for the purposes of foreign policy. The Bailiwick implements sanctions implemented by the UK, ensuring that it remains aligned to the UK on its own sanctions measures and its foreign policy objectives.”

Financial regulators on The Isle of Man are also preparing to implement sanctions if called on to do so.

A spokesman for the island’s government told i: “The Isle of Man Government implements financial and trade sanctions in line with the United Kingdom Government, and therefore currently imposes sanctions against Russia to the same extent as the UK.”

However, some experts remain sceptical over the scale of any financial sanctions the UK will be willing to impose on Russian billionaires.

James Nixey, director at Chatham House’s Russia-Eurasia programme, suggested the Government would not wish to damage the UK’s position as the world’s number-one location for offshore tax havens and the industries built around them.

Mr Nixey said: “It’s not clear to me how far the UK wants to go in terms of stamping out the proceeds of kleptocratic insertion into the UK. I’m afraid the fact of the matter is we’re in it up to our necks because our law firms, accountancy firms and hedge funds have basically had a no questions asked policy up to this point.

“The UK has more offshore tax havens than any other country in the world and as a result of which I feel we are quite frankly complicit.

“One has to retain a sense of cynicism into the extent with which we’re going to devote the resources and it would be an enormous amount of additional manpower and funds if we were going to tackle this properly.”

A report in 2018 from human rights group Global Witness found that Russian oligarchs had around £34bn hidden in British tax havens, five times more than in the mainland UK. The report added that the British Virgin Islands was the second most popular destination for money leaving Russia, second only to Cyprus.

However, since Mr Putin established two offshore tax havens on Russian territories in 2018, oligarchs have begin moving some of their cash back to home soil.

He established the tax-friendly “special administrative regions” to help Russian billionaires avoid financial sanctions from the West following the outcry over the poisoning of former Russian double agent Sergei Skripal and Mr Skripal’s daughter Yulia in Salisbury in 2018.

Located on Oktyabrsky island in the Kaliningrad area sandwiched between Lithuania and Poland, and on Russky island near the borders with China and North Korea, the two SARs have provided oligarchs an exit ramp from foreign jurisdictions.

The Foreign, Commonwealth and Development Office was contacted for comment.