LONDON — For two decades, ultrawealthy Russians have availed themselves of London’s lax regulatory climate to stash webs of property and assets inside the city using anonymous corporate structures that obscure their true ownership.
A red-hot property market, a booming restaurant scene, and a flood of money flowing through museums and auction houses are under threat in the wake of Moscow’s invasion of Ukraine as Western allies seeking to pressure Russian President Vladimir Putin began probing the vast wealth of his oligarch confidantes.
The United States, the United Kingdom, the European Union, and others charge that wealthy Russians have profited from their closeness to Putin, plundering Russia’s natural resources and hiding vast sums of money in overseas property and other investments.
Now, Washington and its allies are coming for the financial wizards who help these wealthy foreigners hide their assets.
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The U.S. and its allies see asset freezes as one way to target people close to Putin, and they intend to sanction individuals and institutions that help to hide their wealth from the government crackdown, Deputy Treasury Secretary Wally Adeyemo said Tuesday.
The top U.S. official, who oversees sanctions policy in the Biden administration, delivered the warning at Chatham House, a think tank in London’s affluent St. James neighborhood that sits surrounded by the mansions and duplexes that are now under threat from Western sanctions.
Adeyemo said some wealthy Russians are seeking to avoid the penalties as they come under scrutiny. Western governments would go after the people helping them, he added.
“Many of these individuals are attempting to move assets in order to avoid accountability. To those considering assisting these elites in hiding their ill-gotten wealth: We will find you,” he said. “And let me be clear: We are prepared to sanction those providing material support to sanctioned Russian elites.”
Petr Aven, who was pictured with other oligarchs alongside Putin at the Kremlin on the day that Russia began its invasion last month, is now under U.K. and European Union sanctions and facing an expulsion order that will force him to leave the country within weeks. The multibillionaire Alfa-Bank director and former academic is unsure of what awaits him after his life changed overnight.
“Will l be allowed to have a cleaner or a driver? I don’t drive a car. … Maybe my stepdaughter will drive. We don’t understand how to survive,” he said in a recent interview with the Financial Times from his double-height penthouse in the central London neighborhood.
He said he is determined to challenge the sanctions against him, but he does not hold out much hope for a quick solution.
“British lawyers do not want to work with Russians,” he told the outlet, a indication of the quickly shifting environment. “I was told it’s almost impossible to change sanctions.”
Aven, who is believed to be close to Putin, is one of dozens of Russian elites now under Western economic penalties.
After meeting with British Treasury officials this week, Adeyemo said the U.S., the U.K., and Europe would also impose penalties on the supply chains fueling Moscow’s war effort.
“We are planning to target additional sectors that are critical to the Kremlin’s ability to operate its war machine, where a loss of access will ultimately undermine Russia’s ability to build and maintain the tools of war that rely on these inputs,” Adeyemo said.
Western governments are looking to increase pressure on Putin for his war in Ukraine by adding to the record slate of penalties imposed in recent weeks. The Biden administration and its allies have coordinated closely on a range of penalties and export controls targeting Russia’s economy, with sanctions that have frozen the Russian central bank’s foreign assets, restricted elites, and targeted key technologies, including semiconductors, that the country’s defense industrial sector relies on.
Adeyemo said the measures would stay in place as long as necessary.
Losing access to the financial system built by the West would have profound repercussions for Moscow, he added, and credited the work of allies in the post-World War II period for creating the norms and institutions that support the world’s advanced economies. Russia, he said, had rejected this system with its invasion and would suffer the consequences.
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“A country like Russia will struggle to operate its economy without access to this system, despite Moscow’s best efforts to disentangle from it and build up defenses for this very scenario, because of the power of the system we have collectively built,” he said.
