Albert Pacey, director-general of the National Criminal Intelligence Service, said that last year there were 200 disclosures of suspicious financial transactions between Russia and Britain, the smallest of which involved hundreds of thousands of dollars.
'For the future, we must be on our guard against exploitation of our financial system by organised criminals from Russia,' Mr Pacey told the Reuters news agency.
He said that on a recent visit to Moscow to discuss the problem with Russian authorities he was told that they estimate annual capital flight from their country to the West at USdollars 20bn a year.
London, along with Switzerland, was a favoured conduit for buying legitimate assets with illegally acquired cash because of the size of its banking industry and its relative stability.
Mr Pacey said the Russian police estimate 2,000 organised crime groups are operating in their country as criminal activity has mushroomed following the collapse of the Communist system.
They say they are hampered in dealing with money laundering because they have to operate under Soviet laws designed for a much more ordered society.
'The Russians do not regulate their banking system - almost anyone can form a bank. They have no legislation at all to deal with money laundering,' Mr Pacey said.
There are hopes that legislation will go through the Russian parliament by the end of this year.
Before the collapse of the Soviet Union, the Communist Party itself sent about dollars 200m abroad each year through its own banks. Intourist, the Russian tourist agency, also supplied foreign currency earnings of about dollars 2bn in 1989, all of which went directly to the Communist Party.
Today a large part of the money reaching London comes from bogus deals concerning Russia's privatisation programme. Former Communist Party officials have been adept at buying into privatisations at rock-bottom prices and selling on raw materials to the West for hard currency.
Russian businesses have also kept foreign currency earnings in London instead of repatriating them, in order to dodge taxes at home.