What are countries doing to investigate and confiscate sanctioned assets belonging to Russian oligarchs?

Posted on by Lucia Cizmaziova

Information and references referred to in this blog can be found in this Overview Country Table

To answer this question, CiFAR has recently conducted research published in a report From Sanctions to Investigations. Legislation, policy and practice linking investigations into the origins of sanctioned assets and recommendations for governments to strengthen the investigation and confiscation of sanctioned assets in From Sanctions to Investigations. Policy brief and recommendations.

The report analyses the existing legislative and policy frameworks, as well as practice that would encourage the start of investigations of assets linked to sanctioned individuals across eight key sanctioning jurisdictions: Canada, France, Germany, Italy, Spain, Switzerland, the United Kingdom and the United States.

The report shows that law enforcement authorities have considerable capabilities and legal pathways available to pursue sanctioned assets if the evidence shows that they might have been acquired via illicit means or are the result of illicit activities. However, corruption investigations into sanctioned assets have happened in only a handful of cases and the commitments and approach towards sanctioned assets varies greatly among these countries.

The lack of data and communication by authorities, previously highlighted by Transparency International, continues to be a major challenge. To understand what steps governments, and their law enforcement authorities and prosecutors are taking towards investigation, and ultimately the confiscation of sanctioned Russian assets, our researchers searched for publicly available information and interviewed partners across these key sanctioning jurisdictions.

WHAT VALUE OF PRIVATE ASSETS ARE FROZEN UNDER RUSSIAN SANCTIONS?

Only a few countries have officially published information about how many assets they have frozen belonging to sanctioned Russian individuals since March 2022. In some countries, such as Italy and Spain, it was the work of investigative journalists who were part of CiFAR’s Russian Escape investigations who revealed the amounts that have been identified by authorities and subject to freezing.

Reports of frozen assets belonging to Russian individuals by country

HOW PROACTIVE ARE GOVERNMENTS ABOUT INVESTIGATING SANCTIONED ASSETS?

While all European governments have been vocal in their support of Ukraine and condemned Russian aggression, not all governments have followed up their words with action in the same way. Nearly all governments have increased the funding for and capacity of the institutions involved in sanctions implementation, investigations and prosecutions. Some have also created specialised inter-agency task forces to trace and scrutinise the assets of sanctioned oligarchs. All countries but Switzerland joined the REPO Task Force, which enables information sharing and international cooperation regarding sanctions, asset freezing, civil and criminal asset seizure, and criminal prosecution.

While Germany set out to reform its institutions and frameworks that tackle money laundering and implement and enforce sanctions, the country did not adopt any new policies or guidance that would speak to investigations of sanctioned assets specifically.

In contrast, a 2022 Circular issued by the French Ministry of Justice instructed judicial authorities to prioritise suspicious transaction reports linked to Russian assets, to cooperate with other governmental agencies working on tracing Russian assets of possible illicit origin, and to prosecute money laundering offenses or breaches of these asset freezes where relevant.

ARE THERE ANY KNOWN INVESTIGATIONS OR FORFEITURE CASES LINKED TO SANCTIONED ASSETS?

After Transparency International France filed legal complaints against persons unknown regarding the potential criminal conduct of five sanctioned individuals for money laundering and related offenses, French law enforcement authorities opened 17 criminal proceedings concerning Russian individuals, which are currently ongoing. In 2023, Alexei Kouzmitchev was indicted for money laundering and tax fraud, among others.

The only publicly known active legal case related to sanctioned assets in Germany has centered on the Russian-Uzbek businessman Alisher Usmanov. After Usmanov was designated in 2022, German authorities conducted raids and searches of his properties throughout Germany and have been trying to investigate Usmanov’s potentially illicit wealth. Some of these searches were, however, found to be illegal by the courts months later.

The US authorities have seized several properties belonging to sanctioned Russian individuals, and they have moved forward with civil forfeiture in a couple of cases as well. The only known successful case of forfeiture of funds and their subsequent transfer to Ukraine to aid in its recovery concerned USD 5.4 million belonging to a businessman Konstantin Malofeyev.

While there are no known criminal or civil proceedings that would require investigations in Canada, there are two ongoing cases under the C-19 Budget Implementation Act – a new law that enables the direct confiscation and repurposing of assets frozen under sanctions.

ARE THERE ANY KNOWN INVESTIGATIONS INTO THE POTENTIAL EVASION OF SANCTIONS?

A French villa linked to Viktor Rashnikov, the boss of one of the largest steel producers in Russia, was initially not declared to the authorities as his property, and it did not appear in the French beneficial ownership registry. Since it was sold shortly after the Russian invasion of Ukraine, it is being subject to investigations of potential sanctions evasion.

In September 2022, almost 150 cases were under investigation for alleged violations of EU sanctions against Russia and Belarus by the German authorities (including preliminary investigations, trying to collect evidence for enforcement action).  Most of these concerned the trade sector and it is unclear how many of these exactly concern the evasion of sanctions linked to individual asset freezes.

In Italy, it is alleged that Dmitry Mazepin and his son Nikita owned two yachts via a company based in Jersey, which is controlled by another company registered in the British Virgin Islands. By the time this ownership was clarified, the yachts were already out of European waters, which secured the owners a charge of sanctions violation and a fine of EUR 500,000 each for Dimitri Mazepin, the company that owns the yacht and its captain.

In May 2023, Switzerland announced that its authorities had initiated 130 investigations, of which 29 triggered criminal proceedings. From these, half had already been concluded. Most of these investigations have been said to largely focus on small luxury goods traders rather than the enabling networks around sanctioned individuals.

The UK media accounts described and followed the investigations of the sanctioned Petr Aven and Mikhail Fridman, which have been partially rolled back against Aven and completely dropped against Fridman.

The US authorities indicted over 30 individuals for the evasion of sanctions, money laundering and other related crimes in 2022 and have seized several properties belonging to sanctioned Russian individuals. For example, at the request of the US, the Spanish authorities seized a yacht allegedly owned by Viktor Vekselberg. Subsequently, the Spanish authorities acted on a U.S. request again and provisionally arrested one of two businessmen who had been charged with facilitating a sanctions evasion and money laundering scheme in relation to the ownership and operation of the yacht.