The Russian oligarchs have secured at least 38.6 billion euros (equivalent to 34 billion pounds) in tax havens and corporations under the control of Great Britain. It is five times more than the money invested directly by Russian citizens in the United Kingdom. More than 30 of these 34 billion pounds have been invested in the British Virgin Islands (Bvi).
This is revealed by a report by the non-governmental organization Global Witness.
The report, ” Missing the bigger picture ” , is widespread just as the British government is facing the consequences the poisoning of the former Russian spy Sergei Skripal and his daughter . The Global Witness report is based on data from the International Monetary Fund of the Russian Central Bank.
According to the analysis of the NGO, the amount of money held by Russian citizens in the United Kingdom is much lower than the assets controlled by the Russians themselves in the British overseas territories, which include some of the major tax havens in the world.
Overseas territories and tax havens
Small in size and mainly consisting of archipelagos and island areas, The 14 overseas territories are those parts of the former British Empire that have not acquired independence or that, contrary to the Commonwealth realms, have voted to remain British dependencies. Despite having each his local leadership, they share the British sovereign as head of state: Queen Elizabeth II. The best known are the Cayman Islands, Bermuda, Gibraltar, the British Virgin Islands, Turks and Caicos, Anguilla and Montserrat.
The Global Witness report concludes that in the British overseas territories the oligarchs and wealthy Russians have invested five times as much money as they have in the United Kingdom.
Together with Cyprus and the Netherlands, the British overseas territories are the most used place by the Russians to secure their money.
In the last ten years, the river of money that has taken the path of tax havens linked to Britain from Russia has been 7 times higher than the flow of money that came directly from Russia to the United Kingdom. In London real estate investments by Russian citizens have increased exponentially in recent years. And not always with clean money, as the documentary film demonstrated “From Russia with cash” broadcast in 2015 by Channel 4, in which a journalist pretended to be a wealthy Russian health ministry official intending to buy a house in London with money from bribes ( in the opening photo a scene of the film with the two protagonists ).
And now Global Witness shows that a much larger amount of Russian money has been invested not in London but in the tax havens associated with Great Britain. Where, in the last 10 years, the oligarchs have channeled a good 68 billion pounds. The British Virgin Islands alone are the second most used destination after Cyprus to secure money from Russia. The assets invested by Russian oligarchs in the British overseas territories amount to 12% of all wealth invested abroad by citizens of the Russian Federation.
The “Russian laundromat” affaire
According to the report, among the billions of pounds that come to the tax havens of Great Britain from Russia there are considerable amounts of dirty money to be recycled.
Companies domiciled in the British overseas territories were, for example, used by Russian businessmen to transfer 100 million pounds that were part of the 20 billion dollars recycled in the scheme known as ” Russian laundromat ” the Russian washing machine, unveiled by the Accrp ( Organized crime and corruption reporting , an organization that groups dozens of journalists from different countries).
The report also describes the case of a British virgin island company linked to the Russian mafia, which transferred $ 900,000 to another Bvi company owned by a Russian hit by US sanctions for the war in Syria. One of the shareholders of this company, Alexander Perepilichnyy, linked to the Russian mafia, later became a whistleblower and died under mysterious circumstances in Surrey in 2012.
London recycling capital
It is no surprise that the UK financial system, with London at its head, is being used to clean up the dirty money of the Russian oligarchs. The surveys of recent years have shown that London is the world capital of recycling. The British National crime agency has estimated that over 90 billion pounds sterling are being recycled each year in the UK.
One of the ways to clean up this river of illegal money is to get them through the British overseas territories. In these countries, such as the British Virgin Islands, you can create anonymous companies protected by secrecy guaranteed by the laws promulgated by the authorities of these countries. Shield companies allow criminals and recyclers to officially separate themselves from their illegal activities. It is in fact almost impossible to trace the identity of the true owners of anonymous companies.
The British Parliament is currently examining the new law against dirty money laundering and on 1 May the government has stated that it will not oppose an amendment requiring overseas territories to set up public registers of beneficiaries within 2019. A turning point in the fight against tax havens.
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The register will serve to make transparent the names of those who actually control companies domiciled in secret jurisdictions linked to the United Kingdom. Britain, for its part, has already provided for the creation of a register of beneficial owners, although in the register of London companies there are still fake entities or entities with names of non-existent people.
Offensive against the Scottish limited partnership
Meantime the British government has launched a new offensive against one of the most used tools to launder illicit money: the Scottish limited partnership (Slp).
It is about limited partnership constituted by at least two shareholders , one of which (the general partner) is responsible for any debts incurred while the limited partner has limited liability but can not play a decision-making role in the company.
The SLPs differ from the limited English, Welsh and Northern Ireland partnerships because they have a “legal personality”, which allows them to enter into contracts, take on debts or own property. In the other states of the United Kingdom all this can only be done by the members.
Announcing the decision to carry out a reform of the SLP, the British government said that thousands of companies legitimately use the SLP but some studies have shown that the companies were used to giant recycling schemes, such as the one that mobilized 100 slp to recycle $ 80 billion from Russia.
According to the new legislative proposal, partners will have to demonstrate a real connection with the United Kingdom and do business or own an address in Scotland. They will also have to register through an agent who will carry out anti-money laundering checks.
The unlawful use of Slps is demonstrated by some cases have come to the fore in recent months. Above all it was above all the Scottish newspaper The Herald . For example, it turned out that five nominees controlled more than half of the 6,800 registered slots between January 2016 and May 2017. It is not enough. About 17 thousand slps, half of the Scottish limited existing partnerships, have been registered in only 10 addresses.
Last year the law that obliged the Slps to indicate their effective owner came into force, but this law which introduced greater transparency led to an 80% reduction in the number of new registered Slps.