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British property management firms are almost certainly helping Russians who own property in the UK to sidestep sanctions, a report has found.
After Russia’s invasion of Ukraine, the government imposed financial sanctions on Russian individuals and organisations with assets in the UK. Known as designated persons (DPs), they are banned from using British financial services to buy or sell property in the UK, and may face freezes on property owned here, rendering them unable to benefit from rental income, or to pay to keep the property maintained.
But an Office of Financial Sanctions Implementations (OFSI) report published in April found that it is “almost certain” that UK property management firms have enabled Russian DPs to breach sanctions.
“OFSI has observed Russian DPs routinely making use of UK property firms to maintain their UK residential or commercial properties in breach of UK financial sanctions, without an applicable licence,” it said.
The report said it was “highly likely” such firms have facilitated payments for property maintenance services, paid the salaries of any household staff, collected rent, paid utility bills and settled property-related debts on behalf of the DP.
“As many Russian DPs have left the UK, OFSI has noted a pattern of live-in staff helping maintain their UK properties,” the report added.
Last year, the OFSI placed a £15,000 fine on property management company Integral Concierge Services Limited (ICSL) after it made or received 26 payments on behalf of a sanctioned individual.
Joe Powell, Labour MP for Kensington and Bayswater, chair of the Anti-Corruption and Responsible Tax All-Party Parliamentary Group, said it was “shocking that UK property firms have been enabling sanctioned individuals to avoid restrictions”.
“Once again, opaque corporate structures and enablers in professional services have been used to keep dirty money in UK property. Anti-money laundering and sanctions enforcement must be toughened up to ensure London becomes a leader on tackling dirty money,” he added.
Margot Mollat, senior research and policy manager at Transparency International UK, said: “It is clear that unscrupulous lawyers and estate agents have been helping the Russian elite evade sanctions, with opaque trusts helping them to hide assets in plain sight…
“To stop Russian oligarchs dodging asset freezes, ministers should increase trust transparency and overhaul how they regulate enablers.”
