Downing Street has rejected accusations the Government is "turning a blind eye" to "dirty money" from Russia.
In a strongly-worded report the Commons Foreign Affairs Committee said despite the outcry over the Salisbury nerve agent attack, President Vladimir Putin and his allies were continuing to use the City as a base for their "corrupt assets".
But Number 10 insisted the UK was determined to drive "dirty money and the money launderers" out of the country.
The Prime Minister's official spokesman said: "The UK has taken a leading role in the global fight against illicit finance and criminals should be in no doubt we will come for them, their assets and their money.
"We are determined to drive dirty money and the money launderers out of the UK and we'll use all the powers that we have - including the new powers in the Criminal Finance Act - to clamp down on those that threaten our security.
"It is for our independent law enforcement agencies, and ultimately the courts, to use these powers but this Government will continue to take all necessary steps to keep the country safe."
In its hard-hitting report, the committee said the Government needed to show "stronger political leadership", with further sanctions against "Kremlin-connected individuals" and action to close loopholes in the existing regime.
Assets stored and laundered in London, it said, were being used to support Mr Putin's campaign to subvert the international-rules based order and undermine Western allies and combating it should be a "major UK foreign policy priority".
Despite the attempted assassination of former spy Sergei Skripal and his daughter, Yulia, using a Novichok nerve agent, blamed by Britain on the Kremlin, the committee said it remained "business as usual" in the City for wealthy Russian oligarchs.
When they had tried to press Foreign Secretary Boris Johnson on what could be done to halt to flow of corrupt money into the UK, the MPs said he had appeared to suggest "there was no real role for Government in this process".
"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," the committee said.
"These assets, on which the Kremlin can call at any time, both directly and indirectly support President Putin's campaign to subvert the international rules-based system, undermine our allies, and erode the mutually-reinforcing international networks that support UK foreign policy.
"This has clear implications for our national security. Turning a blind eye to London's role in hiding the proceeds of Kremlin-connected corruption risks signalling that the UK is not serious about confronting the full spectrum of President Putin's offensive measures."
The committee called on the Government to work with US and EU allies to identify and sanction individuals and entities used by the Kremlin in carrying out its "acts aggression" - including disinformation campaigns, the destabilisation of neighbouring states and foreign assassinations.
Committee chairman Tom Tugendhat said: "There is no excuse for the UK to turn a blind eye as President Putin's kleptocrats and human rights abusers use money laundered through London to corrupt our friends, weaken our alliances, and erode faith in our institutions.
"The UK must be clear that the corruption stemming from the Kremlin is no longer welcome in our markets and we will act."