Financial safety

SHOULD BRITAIN’S CRACKDOWN ON DIRTY MONEY WORRY RUSSIAN OLIGARCHS?

“More anti-Russian hysteria,” agreed the dandy. “It’s just like back home. Suddenly, I don’t feel safe anymore.”

The reason for their concerns? Sweeping new powers that U.K. lawmakers introduced earlier this year to crack down on the estimated £90 billion ($126 billion) currently being laundered through companies and luxury real estate in central London. Known as unexplained wealth orders, the new investigative powers allow British law enforcement to demand that any person holding property or assets worth more than £50,000 ($70,000) in the U.K. explain the origin of their wealth. The new powers—coupled with an aggressive mood in Parliament and among law enforcement authorities toward money laundering—threaten to destroy the low-regulation financial culture that until recently made London an attractive place to park often-dubious money for a swath of the world’s elite. And particularly for oligarchs from the former Soviet Union.

“Basically, they are reversing the burden of proof,” says Alexei (the Venetian dandy), a Russian businessman who has lived in London for over 20 years. (He asked for anonymity when discussing his financial affairs.) The British authorities “can label you guilty until you show that you are innocent. London was always an easy place to do business. Now, I think people will think twice about investing there.”