UK ‘weakening threat to Kremlin by failing to close property loophole’
Britain has frustrated its EU allies and weakened the west’s financial threat to the Kremlin by failing to close a loophole that will ensure London real estate remains a safe haven for Russian money, according to diplomatic sources in Brussels.
New legislation, described as the “toughest ever” by the foreign secretary, Liz Truss, gives the government powers to freeze the assets of individuals linked to the Russian state in the event of an invasion of Ukraine but fails to “capture” property owned via anonymous offshore structures.
The irritation in EU capitals at the perceived hole in the UK’s sanctions threat has only been exacerbated by Boris Johnson’s repeated calls in recent days for European governments to “wean” themselves off dependency on Russian gas.
“Parading around preaching at your allies is all very well if you have sorted your own house out,” said one diplomatic source. “But they haven’t. You only need to look at the number of empty properties in Kensington and Chelsea to know that.”
Truss had claimed that legislation laid in parliament on 10 February left the oligarchs with “nowhere to hide” as the UK is able to sanction entities and businesses of economic and strategic significance to the Russian government, as well as their owners, directors and trustees.
But EU capitals are concerned by the failure of the government to ensure that the identity of those who own real estate is at hand in the event of sanctions being necessary. According to the NGO Transparency International, more than 85,000 properties in the UK are owned anonymously by entities registered abroad.
The legal loophole in Europe’s punitive package has been the subject of discussions in recent days among diplomats coordinating Europe’s response to
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