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What does the EU Commission propose?
Brussels will create a legal framework for EU member states to make it easier to confiscate and expropriate money from criminal activities. So far the rules have been very different, expropriation is very difficult. The proposals mainly target terrorism or cross-border organized crime, but they could also apply to the assets of oligarchs on the EU sanctions list.
Italian financial police are investigating the ownership of the mega yacht “Sheherazade”, worth about 700 million dollars, which is suspected to belong to the Russian president.
The main point is to speed up the processes. If a national court is convinced that the money comes from criminal activities, then it should be frozen before sentencing. In case of doubt the Court would have seven days to make a final decision. Because money “tends to disappear,” says Commissioner Ylva Johansson. The rules will also apply to the repayment of sanctioned money, including transfers to family members.
As for the Russian oligarchs, many EU member states have legal difficulties in freezing and receiving money in general. The EU already has the opportunity to inform about the violation of sanctions through informants. But in some countries they are seen only as lawlessness. Brussels now proposes to turn the violation of sanctions everywhere into a criminal offense.
Changes in national laws also make it easier for oligarchs to get where they want to go, says Legal Commissioner Didier Reynders. Through the unification of laws this becomes impossible. And finally, the money of Putin’s billionaire supporters must go to Europe, to a mutual fund for the reconstruction of Ukraine.
Harder than hoped
“A distinction must be made between national and private assets,” said Maria Demertzis, an economics researcher at the Bruegel Institute in Brussels. In the first round of sanctions it was decided to freeze the assets of the Russian Central Bank. “It does not belong to the government, but to the Russian nation. Freezing or taking her assets is a very difficult thing. On the basis of what legal right can national property be confiscated? (…) It affects the basic laws and without the introduction of a legal framework it can be very dubious. ”
The process can be very simple on private property, however it often turns into “cat game with mouse”. Because it is difficult to identify money, find it and get it.
Has the EU made mistakes in formulating the sanctions against Russia so far? The US has more experience in this area, says the economist, the EU is in the learning phase.
But member states can search anywhere for untaxed assets or criminal fraud. These would be reason enough to make property confiscations. However: If sanctions against Russia are to damage finances, then it would be better to target oil and gas embargoes, rather than pursue specific oligarchs, who have long operated outside Russia, says Demertzis.
Russian wealth is hard to find
Despite some spectacular actions, such as the confiscation of yachts, many of the G7 countries, most of which are EU member states, are not prepared to generally identify the oligarchs’ assets. “They lack the skills and competencies to search for illegal assets,” the non-governmental organization Transparency International wrote in a recent report on the subject. Governments face major legal problems if they try to seize these assets and return them to victims of corruption.
But since 2004, when advice was first given internationally to improve instruments on the issue, nothing has been done. “Kleptocrats still have plenty of opportunities to hide their money across borders.” The real estate sector is still a hole to inject dirty money. Especially where unregistered property is still allowed.
Transparency expert Maira Martini urges countries to act at last: “The same spaces that enable kleptocrats to increase and hide their wealth prevent the voluntary authorities from finding them.” “States must accompany ambitious rhetoric to hold Russian elites accountable for their ‘great and sincere work.’ This includes, among other things, increasing resources for police and justice.
Critics warn of legal consequences
Christian Socialist MEP Markus Ferber is among those who criticize such plans. He thinks the legal risks outweigh the benefits of enforcing sanctions. However, he thinks it is right to turn the violation of sanctions everywhere in Europe into a criminal offense, says the spokesman for the economic policy of the faction of the popular parties, EVP. Despite this, he considers the EU Commission proposal a very “symbolic policy”.
The principles of the rule of law should not be bluntly violated, just to touch a few Russian oligarchs. “In all the seizures that will end in favor of the reconstruction of Ukraine, there must be a clear reference to the Russian state and the Russian attack. “The values of the assets of the Russian Central Bank are not in question on this issue, the values of the assets of individuals should be set at a higher level.”
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