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U.K. Lawmakers Say Dirty Russian Money Is Still Flowing to London

The Russian Embassy on the exclusive avenue of Kensington Palace Gardens in March in London.Credit...Leon Neal/Getty Images

LONDON — After the poisoning of a former Russian spy, Sergei V. Skripal, on English soil, the British government expelled 23 Russian diplomats. Its foreign secretary, Boris Johnson, compared the upcoming World Cup tournament in Russia to the Nazi Olympics in 1936. And Prime Minister Theresa May promised there would be no place for “serious criminals and corrupt elites.”

Yet, despite the heated declarations, business continues as usual for wealthy Russians who hide and launder corrupt assets through London, a parliamentary committee said Monday in a scathing assessment that warned of “inaction or lethargy” over dirty money from Moscow.

The report, from the influential House of Commons foreign affairs committee, said there was no excuse for Britain “to turn a blind eye” while associates and allies of the Russian president, Vladimir V. Putin, “use money laundered through London to corrupt our friends, weaken our alliances and erode faith in our institutions.”

Britain’s financial and legal firms have been big beneficiaries of Russian capital flight, and London, less than four hours flying time from Moscow, is a popular destination for the country’s oligarchs, some of whom have invested in luxury property, soccer teams and other assets.

With a deep chill in relations between Britain and Russia after the poisoning of Mr. Skripal and his daughter, Yulia, the British government has been under pressure to make life harder for allies of Mr. Putin by making sanctions and anti-money laundering rules more effective.

Yet the committee report suggests that Britain’s financial center has so far found it impossible to resist the large sums of money that flow from Russia, even if there are troubling questions about the source of some of these assets.

“Despite the strong rhetoric, President Putin and his allies have been able to continue ‘business as usual’ by hiding and laundering their corrupt assets in London,” said the report, which entitled one section of its findings “closing the ‘laundromat.’”

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Britain’s foreign secretary, Boris Johnson, arriving at the prime minister’s residence in London last week.Credit...Peter Nicholls/Reuters

Though the proportion of dirty money in London was estimated to be small, relative to the size of the financial sector, the committee said, “the damage that this money can do to U.K. foreign policy interests, by corrupting our friends, weakening our alliances and eroding trust in our institutions is, however, potentially enormous.”

The document raised concerns about so-called “tier 1,” or investor, visas, which are open to those able to invest $2.7 million in the country, hinting that it plans to study the issue in more detail. Over the weekend it emerged that Roman Abramovich, the billionaire Russian owner of Chelsea soccer club, is experiencing delays in renewing his investor visa.

Since 2014, the British government has been empowered to refuse applicants for these visas if there are reasonable grounds to believe the money to be invested was obtained unlawfully or if there are concerns about the character of investors. After that change, applications dropped by 84 percent.

Now existing visa holders are being checked against the tighter requirements, the government says.

The committee also had harsh words for Linklaters, a prestigious British law firm, that refused to give evidence to the lawmakers over its work on deals involving Russian companies. In the report the committee asked whether such deals had left Linklaters “so entwined in the corruption of the Kremlin and its supporters that they are no longer able to meet the standards expected of a U.K.-regulated law firm.”

In a statement Linklaters said it was “very surprised and concerned” at the criticism, adding that it has the “highest standards of business conduct, ensuring we comply with applicable laws and professional rules, including with respect to anti-bribery and corruption, anti-money laundering and sanctions.”

There was also veiled criticism of Mr. Johnson, who was asked by lawmakers what his department could do to stop the flow of corrupt money. “He appeared to suggest, however, that there was no real role for government in the process,” the report said.

While noting that Mr. Johnson and other ministers were right to assert that they cannot order law-enforcement agencies to investigate individuals without any evidence, the committee added that observing due process “cannot be an excuse for inaction or lethargy.”

Lawmakers noted that Russia itself did not seem overly worried that Britain’s aggressive rhetoric would be put into practice. On March 15, after the expulsion of Russian diplomats from Britain, Russia’s embassy in London drew attention on Twitter to a bond sale by Gazprom, the Russian energy company, with the words “Business as usual?”

A version of this article appears in print on  , Section A, Page 8 of the New York edition with the headline: British Lawmakers Say Dirty Russian Money Is Still Flowing to London. Order Reprints | Today’s Paper | Subscribe

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