Labour brings forward measures to act against Russian oligarchs in ‘weeks not years’

Labour has tabled amendments to take tougher action to drive out the malign influence of Russian money from Britain’s economy.

Jonathan Reynolds MP, Labour's Shadow Business Secretary, has written to the Government asking them to back Labour’s amendments to act against Russian oligarchs propping up Putin’s regime in the coming weeks.

Labour’s measures would require the new register of interests to come into force within weeks, meaning that Russian backed companies and property would have to be declared within 28 days of the legislation passing rather than the Government’s proposed 18 months. Given the perilous and fast moving situation in Ukraine, Reynolds warns the 18-month delay “offers no deterrent now and gives oligarchs a window to escape sanctions”.

In the letter, Labour also encourages the Government to support Labour’s amendment to bring forward reform to Companies House and expose Kremlin-backed shell companies, as well as property and land.  

The Government’s own White Paper states that Companies House “provides criminals with a veneer of legitimacy to help commit a range of crimes, from grand corruption and money laundering to fraud and identity theft”.

The Conservatives have been criticised for repeated delays in bringing this legislation, first promised in 2016 and drafted in 2018, forward. Analysis by Transparency UK highlights the cost of the delay, estimating that since 2016 £1.5 billion of UK property has been bought by Russians accused of corruption or links to the Kremlin.

Calling for unified and swift action against Russian state actors in our economy now, Jonathan Reynolds writes:

“In the spirit of ending malign influence in our economy we hope that the Government will support our amendments which seek to strengthen our ability to hit Russian oligarchs as quickly and effectively as possible.” 

Ends 

Notes to editors:

• Labour’s amendments

Commitment to bring forward reform of Companies House

1. New clause

[38A] Further reforms to Companies House

(1) Not later than 28 days from when Part 1 of this Act comes into force, the Secretary of State must publish draft legislation for the purpose of making further reforms to Companies House, including to support the effective functioning of the register of overseas entities.

(2) The draft legislation must include -

Explanatory note:

This new clause would compel the Secretary of State to publish draft legislation on reforms to Companies House, including reforms that would support the operation of the Act.

Reducing the transition period

Labour will amend the Bill to change the grace period in which foreign entities must apply to the register from 18 months to 28 days except for property bought before 1999, which are currently out of the scope of the Bill, to give the Government time to find a way of making sure pre 1999 purchases are also included in the final Bill to ensure all foreign owned entities are included on the register

• Full text of letter 

Dear Kwasi, 

Today, during Prime Minister’s Questions, Keir Starmer asked for your government’s support for Labour’s proposals to take the action that is needed to truly root out Kremlin backed corruption from our economy. Our parties stood united before the Ukrainian ambassador and rightly lauded the heroism of Ukraine and pledged to preserve the sovereignty of Ukraine and isolate Putin’s regime. It is in that unified and determined spirit with which I write to you today.

Labour welcomes the Government’s decision to bring forward legislation to set up a register of overseas entities holding UK property and land and their beneficial owners. Labour has been calling for these measures for years and have consistently raised the alarm about the role of Kremlin backed capital in the UK and the lack of action from the Conservative government. That alarm has reached fever pitch as the unprovoked and unjustifiable Russian invasion of Ukraine continues at horrific human cost. I hope you agree with me that any action we as the UK take must now happen at pace, particularly on sanctions for Putin’s cronies in London.

London is respected across the world as a prime financial destination, but sadly it has also become the destination of choice for Russia’s kleptocrats under this Government. Britain has a completely deficient system of corporate registration that permits layers of secrecy in which those who prop up Putin and the Russian state are hiding. Transparency International research has shown that UK property worth £1.5 billion has been bought since 2016 by Russians accused of corruption or links to the Kremlin.

This is not simply a matter of targeting individuals or entities through sanctions but about fixing a broken system that helps to sustain Putin's invasion of Ukraine. Britain’s openness to fraud and money laundering, inadequate regulation of political donations, lax mechanisms of corporate governance, and weakness to foreign interference threatens our national security. 

In the spirit of ending malign influence in our economy now we hope that the Government will support our amendments which seek to strengthen our ability to hit Russian oligarchs as quickly and effectively as possible.  

Firstly, we will table an amendment to close the 18-month gap currently in the legislation. By including a transition period this legislation offers no deterrent now and gives oligarchs an 18 month window to escape sanctions. Labour wants the obligation to register to come into effect within weeks, not years. Given the continually escalating situation in Ukraine I hope we can count on Conservative support to tighten the net on dirty Russian money as soon as possible.  

Secondly, Labour will bring forward an amendment to ensure basic ID checks in the new register of overseas interests for beneficiaries to expose those propping up Putin.  

Thirdly, I can see no cause to delay the urgent reform to Companies House that your own White Paper admits provides a “veneer of legitimacy” to those who have earnt no place in our economy. We must act now to reform Companies House and ensure transparency not just in who owns UK property but also expose those who seek to hide behind shell companies registered in the UK.

I look forward to your response and to working with you to protect our great financial institutions from those who threaten our national security.  

Yours sincerely, 

Jonathan Reynolds MP

Shadow Secretary of State for Business and Industrial Strategy