How easy is it to sanction a Russian oligarch? And will it really help to pressure Putin?

A month after the U.S. and its European allies announced an unprecedented treasure hunt to sanction the assets of Russian oligarchs linked to Vladimir Putin, the realization is beginning to dawn that tracking them down and seizing them away is easier said than done.

Several luxury ‘super yachts’ of sanctioned oligarchs, have escaped to safe ports in Turkey while one top billionaire target announced he longer owns any assets as they were transferred to family members years ago.
U.S. officials this week announced the launch of REPO, the Russian Elites, Proxies, and Oligarchs multilateral task force, with representatives from Europe, Canada, Japan and Australia.

“We are already working with our international partners to freeze and seize properties belonging to sanctioned Russian oligarchs worldwide,” said Attorney General Merrick Garland. “We will continue to work together to take all appropriate actions against those whose criminal acts enable the Russian government to continue its unjust war against Ukraine,” he added.

While some mega yachts have been seized in Europe, with hundreds of millions of dollars, it’s not easy to see what officials have got to show for their efforts so far. In fact, it could take years to track down the sanctioned assets.

“ As the world is rapidly discovering, it’s not so simple to sanction an oligarch,” according to the Russian Asset Tracker, created by the Organized Crime and Corruption Reporting Project (OCCRP), a worldwide independent media network.

How can the illicit assets of Russian oligarchs be traced?

It cited the example, of Alisher Usmanov, one of the sanctioned Russian billionaires. His spokesperson this week declared Usmanov’s assets are untouchable as they were moved to irrevocable trusts for estate planning purposes in 2006 and are no longer in his name.

"From that point on, Mr. Usmanov did not own them, nor was he able to manage them or deal with their sale but could only use them on a rental basis," the billionaire's spokesperson told The Guardian. "Mr. Usmanov withdrew from the beneficiaries of the trusts, donating his beneficial rights to his family."

According to OCCRP, Usmanov maintains a 49-percent stake — just under the sanctions threshold — in his main business conglomerate. The remainder is held by a variety of secretive offshore companies and business associates.

One of Usmanov’s sisters, a gynecologist in Tashkent, was the beneficial owner of 27 Swiss bank accounts holding hundreds of millions of dollars. Most were connected to his business empire.

“Given Usmanov’s skill in exploiting the global financial system and its built-in loopholes, it’s unclear whether even identifying all of his assets is possible, much less sanctioning them,” OCCRP said.

That included several mansions in the UK and the $600 million super yacht, Dilbar, registered in the Cayman Islands which has been reported seized in Hamburg, Germany.

The world needs to create an international public register of the wealth of Russian oligarchs, according to José Antonio Ocampo, former Colombian finance minister and president of the Independent Commission for the Reform of International Corporate Taxation (ICRICT).

"A global financial register (...) would allow governments to identify where wealth is located and use that information to impose sanctions when necessary," said Ocampo, who teaches global economic governance at Columbia University in New York.

U.S. officials make no secret that the task is not an easy one. Andrew Adams, a federal prosecutor who is leading a Justice Department ‘KleptoCapture’ task force, stressed property seizures must be conducted within the law.

“ You cannot just walk up and grab somebody's yacht. You have to walk through the facts that link the property to a crime,” he told MSNBC in an interview this week.

However, while all the focus is on the wealth they have amassed, including luxury ‘super yachts’ and European soccer clubs, the real aim has more to do with Putin’s access to influence abroad, says Alex Finley, a former CIA agent who now writes satirical novels.

The role of Putin's oligarchs in 'Russian Influence Operations'

Besides being Putin’s “wallets”, the oligarchs served as instruments of what intelligence agents call ‘Russian Influence Operations’ abroad, says Finley.

“Part of what they were doing was buying influence and integrating themselves into British, European and American society,” she said.

Over the last decade, Putin was remarkably successful is gaining influence in western society and politics, largely through his circle of oligarchs who used their wealth to buy their way into the circles of power in places like Washington DC and London.

Examples abound, from Donald Trump’s personal infatuation with Putin, as well as several business transactions with his oligarchs like Dmitry Rybolovlev, a fertilizer magnate and owner of Monaco soccer club.

British prime minister Boris Johnson has also found himself defending his friendship with Evgeny Lebedev, owner of two major London newspapers. Despite being the son of a former KGB agent close to Putin, he was named to the House of Lords in 2020, one of the country’s highest honors.

Lebedev used his influence to promote Brexit, Britain’s exit from the European Union, while an investigation into alleged Russian election meddling dominated the early years of the Trump administration. While the ‘Mueller investigation’ eventually led to 200 criminal charges, it did not find sufficient evidence that “members of the Trump campaign conspired or coordinated with the Russian government.”

Can Putin be pressured through the oligarchs?

“I don't think the idea behind the policy is let's get the yachts and then everything will be fine,” said Finley.

"The idea is to put pressure on Putin from every possible angle, forcing the oligarchs to finally end their two-sided game of supporting a dictator and his destabilization activities, while on the other hand, taking full advantage of those very same societies that they're helping to destabilize and using our rule of law to stash their money,” she added.

She went on: “this is one way of saying, OK, now that's enough. That game has to end, and now you have to choose. Are you going to live in Russia on a Russian economy under a Russian dictator that you’re supporting? Or, are you going to help us end this?”

How much influence the oligarchs have over Putin is unknown. “They're the only ones who've been able to get in a room with him recently other than his generals and his intelligence officials,” said Finley.

The government says the sanctions imposed already have had a biting effect on the Russian economy. Russia lost access to vital imports for its military gear and more than $600 billion in assets held by its central bank, and faces ongoing rounds of targeted sanctions against companies and the wealthy elite who are tied to Putin. (On Thursday Biden sanctioned 400 Russians including members of the Russian parliament).

The Russian stock market has yet to reopen since the sanctions began. The Institute of International Finance estimates that the Russian economy will shrink by 15% this year.

Even if the oligarchs money is out of reach, it’s not as much use to them now, especially if they can’t travel to the playgrounds of Europe and enjoy their yachts.

The question is whether that will be enough to pressure Putin into backing down. “The best possible outcome is that there's enough pressure from inside Russia that Putin goes away in a palace coup, in whatever form that may take. So, the more that you can do from the outside to push that internal pressure, the better chance of success,” said Finley.

The REPO and KleptoCapture task forces are reportedly discussing ways to bring to justice enablers and gatekeepers who have facilitated the movement of sanctioned assets or other illicit funds.

Seizing real estate and yachts helps add to the pressure in other ways, says Finley. “It's not just the oligarch who’s going to be unhappy,” she said.

“As soon as the wife and children are unhappy, and the mistress no longer wants to provide you what the mistress used to provide, this lifestyle that you become accustomed to goes away and you can get a bit angry about that,” she added.