"Be in no doubt that if Russian companies are prevented from raising capital on the UK financial markets, if we unpeel the facade of Russian ownership of companies, of property, it will start to hurt."

Johnson said he might have to go further given the expectation of "more Russian irrational behaviour to come" as "all the evidence is that President Putin is indeed bent on a full-scale invasion of Ukraine".

Such a move would be "absolutely catastrophic", he added, saying it was "absolutely vital that that effort, that conquest of another European country, should not succeed and that Putin should fail".

Putin on Monday recognised the independence of the rebel-held Donetsk and Lugansk regions of Ukraine and instructed the defence ministry to assume "the function of peacekeeping" in the separatist-held regions.

The move ratcheted up weeks of tensions and Western diplomatic efforts to de-escalate the situation, after a massive build-up of troops on Ukraine's border.

Britain's relations with the Kremlin have been frosty since the radiation poisoning death of a former Russian spy in London in 2006, and the attempted murder of another double agent in the south-western city of Salisbury in 2018.

Successive governments in London, however, have faced sustained pressure to act against illicit Russian money circulating through the city's financial markets since the fall of the Soviet Union.

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