The West’s confiscation of Russian oligarchs’ superyachts made headlines as Vladimir Putin’s inner circle has been targeted for the invasion of Ukraine, but experts warn that more cash and assets should be identified and blocked.
The European Union, the United Kingdom and the United States announced unprecedented sanctions against key figures in the Moscow elite.
Even countries long known for harboring assets with few questions asked, such as Switzerland and Monaco, have joined these measures.
In the sanctions lists that continue to grow, hundreds of people have been targeted, including lawmakers, high-ranking military officers, prominent journalists, business leaders and financiers.
In addition to freezing assets, actions can sometimes include bans from imposing sanctions on states’ territory.
Notable people affected include Nikolai Tokarev, the head of the oil and gas giant Transneft, the head of the Rostec defense corporation Sergey Chemezov or the head of the VEB development bank Igor Shuvalov.
US President Joe Biden warned in his State of the Union address last week that Washington would “find and seize its yachts, luxury apartments and private jets.”
“We are coming for your bad gain.”
French Finance Minister Bruno Le Maire said that “partners of the oligarchy, their children and their real estate companies” will be affected, “so that they cannot hide behind financial structures”.
Many wealthy individuals use complex ownership structures to reduce tax bills or obfuscate the true owner of an asset.
Besides the richest members of the oligarchs close to Putin, “there is a kind of hinterland of two to three thousand people… who are also very wealthy financially… and they are all connected and supported by the Putin regime,” he said. Robert Barrington, Professor of Anti-Corruption Practice at the University of Sussex, UK.
Hidden billions – the UK was one of the western countries most favored by Russians who store their fortunes in financial assets or real estate, which made the capital earn the derogatory nickname “Londongrad”.
In addition to high-end residential properties, London also offers facilities such as legal resources, massive wealth management for the city, and world-renowned boarding schools and universities for the descendant of the wealthy.
Barrington said about 1.5 billion pounds ($1.9 billion, 1.8 billion euros) of property ownership in London in desirable areas such as Kensington, Chelsea and Hampstead had been returned to the oligarchy, likely a fraction of the total.
“Luxury properties are the preferred means of money laundering resulting from corruption or misappropriation of public funds,” said Sarah Brembieuf of Transparency International France.
A short hop from Britain, France also “hosts these ill-gotten gains”, piling up on the sunny south coast and in the upscale neighborhoods of western Paris or the Alpine resorts.
Real estate in Mediterranean regions such as Nice and Saint-Tropez has been traced to oligarchs close to Putin and has already been targeted with sanctions.
But none of the experts AFP spoke to were able to estimate the size of the Russian elite’s Western holdings.
Creating Wealth When it comes to managing their money, Judy Vittori, a professor specializing in corruption at Georgetown University in the US, said few “do not really do things themselves.”
“They have a team of supporters to do this for them. They are lawyers, accountants, art dealers.”
Transparency’s Brembeuve said that “not all of them do what they’re supposed to” when it comes to reporting suspicious assets or transactions to authorities — “even though they are subject to anti-money laundering requirements” in the laws of many Western countries.
Last month, a consortium of investigative journalists alleged that for decades Credit Suisse had held billions of euros in funds in accounts for criminals, dictators and rights abusers, and had not met its reporting obligations.
The bank itself rejected the claims.
Determining the true origin and ownership of assets can be daunting and hard work through shell companies and complex structures.
“It would take a significant mobilization by the intelligence services” to identify a large part of the hidden wealth, said Julien Martinet, a lawyer at France’s Swift Lite.
In France, only one large seizure has made headlines since the sanctions were imposed – the Amore Vero yacht linked to Rosneft chief Igor Sechin, believed to be worth up to 120 million euros.
Meanwhile, Italy said on Saturday it had confiscated yachts owned by steel tycoon Alexei Mordashov and Putin confidant Gennady Timchenko, worth 95 million and 50 million euros, respectively.
But experts remember that only days after the sanctions were imposed, wealth investigations sometimes require years to complete.
US Attorney Merrick Garland has already announced the formation of a task force to track the assets of the oligarch dubbed “KleptoCapture,” 10 prosecutors as well as federal investigators and tax specialists.
Similar operations have been carried out in other western countries including France, while online hobbyists are also advancing.
American teenager Jack Sweeney has created an account on the Russian Oligarch Jets Twitter account to track elite private jets.
In addition to identifying and freezing assets, taking them directly presents greater legal hurdles.
For example, in France, lawyer Martinet said that “violating property law requires a law, not just a regulation or decree” from the government.
A senior official in the French oligarch’s task force said they were able to seize the Amore Vero superyacht only because its crew tried to leave for Turkey, “putting themselves out of the law.”
Several Russian billionaires have already moved their floating mansions to safer waters, with rumors of upcoming moves away from the Cote d’Azur, according to a source familiar with the industry.
The source mentioned Dubai as a potential destination, while the Maldives – which does not have a delivery agreement with the US – now hosts several yachts, including those of aluminum magnate Oleg Deripaska and steel tycoon Alexander Abramov.
On the ground, there were little indications of a sudden escape from possessions in southern France.
But in London, billionaire Roman Abramovich offered his stake in Chelsea Football Club for sale, promising to reap profits to help the victims of the war in Ukraine.
Abramovich, the co-founder of aluminum giant Rusal, grew rich in the 1990s when Russia privatized industries of the former Soviet state and Forbes estimates his fortune at more than $12 billion.
He is close to Putin but has not yet been targeted with sanctions.
Also in Britain, financier Michael Friedman withdrew from the investment company LetterOne, which he co-founded, and from all the European companies in which he owns a stake.
The sanctions targeted him and his partner, Petr Avin, but they denied any “financial or political relationship” with Putin.
In a letter to LetterOne staff, Friedman told staff last week that “war can never be the answer” and called for an end to “the bloodshed.”