“It’s not like anyone sat down in London and said, ‘how do we attract all this money?’. There isn’t an ‘attract illicit finance to the UK’ strategy department in the Cabinet Office”. Yet over decades of experience monitoring the financial connections between the UK and Russia, Tom Keatinge has seen that whenever our government has had the opportunity to address international money laundering and tax avoidance, “it always seems to have gone in the direction of enabling this to occur. Doors have been left ajar.”
Two and half weeks after Russian tanks rolled into Ukraine, the British government was scrambling for ways to clamp down on money laundering by Russian oligarchs. Keatinge, the director of the Centre for Financial Crime and Security Studies (CFCS) at the Royal United Services Institute (RUSI), had every reason to be frustrated: since launching the CFCS in 2014, he has been part of a small but vocal group warning the government repeatedly about the dangers of allowing Russians to launder illicit wealth in the UK. Their warnings have been largely ignored. “Successive governments have had a policy of benign neglect on the topic of the UK and dirty money,” he said. “It’s everyone’s third or fourth priority.”
The war in Ukraine changed this abruptly, and the government is suddenly much more attentive to Keatinge. He has been called upon to provide expertise on sanctions against individuals, money-laundering in the capital and the Economic Crime Bill.
Before Keatinge launched the CFCS, he spent 20 years on the fixed income desk at JP Morgan, where he often worked with clients in emerging markets such as Russia and Ukraine. “People like me… were paid a lot of money to look for doors that were slightly ajar, and figure out how to get our clients through those doors,” he told me.
Successive governments have failed to appreciate the complexity of this problem. For a brief period after the Skripal poisonings in 2018, Keatinge – who grew up in Salisbury – thought things were going to improve. “Theresa May, when she was in the Home Office, really cared about this issue.” But then Boris Johnson took office and the government’s long-term policy of benign neglect was replaced, Keatinge said, with something closer to “purposeful neglect”.
We spoke the day after a Sunday Times investigation had reported on Johnson’s friendship with Evgeny Lebedev, now Lord Lebedev, who owns the Evening Standard. The investigation alleged that Johnson had personally intervened to dismiss a warning from the UK intelligence services against giving a peerage to Lebedev. The Prime Minister has denied the claims.
“I don’t buy into the conspiracy theories that Boris is owned by the Kremlin,” said Keatinge. “But… did Boris get confronted with some information and think, ‘well, it doesn’t matter, he’s a nice chap, and I know better because I’ve been on holiday with him’?”
“No one at a senior level of government cares about this,” he told me. “Not a single person – until the war.”
While the government has passed the Economic Crime Bill at speed, Keatinge sees it as legislation made by a government “caught on the back foot… there’s no Companies House reform in there, and central to fixing the UK’s problem with economic crime is to fix Companies House.” A version of the bill was originally published in 2018 (and Keatinge gave evidence for it). “If they had got on with it back then, it would now be active and working. Instead, we’re going to have to wait for years before it becomes functional.”
For those involved in the creation of the Bill, watching the Queen’s Speech became an ordeal. “It always got mentioned, [but it was] ‘it will be in the next session’ or ‘when parliamentary time allows’.”
“They had time to debate the pet microchipping bill. If it’s not deemed to be more important than pet microchipping, then you know where we are.”
At the same time, however, the government’s lack of preparedness means that some extreme proposals are now being tabled: Michael Gove’s suggestion that the government could seize properties owned by oligarchs and allow refugees to live in them, for instance. “There’s a thing called rule of law,” Keatinge said. “We’re a democracy… what we can’t do is turn ourselves into a tin-pot dictatorship.”
Keatinge’s view is that the government needs to back up its extravagant talk with some real work. Roman Abramovich, who was sanctioned by the UK last week, is a case in point. “Nobody will be able to demonstrate that Chelsea Football Club was bought with the proceeds of corruption. It’s hard enough to forensically trace money that came in three years ago, let alone 20 years ago.”
“We need a five- or ten-year political strategy for dealing with this. We need to accept that… since capital markets were liberalised, for a quarter of a century… we haven’t done anything about it. You can’t reverse that overnight.
“The government basically takes the same approach to these kinds of issues that men take to their health. They don’t do anything about it until it really matters. And then sadly, often, it’s too late.”