Author: Dr. Angelika Hellweger
27 February 2023
2 min read
The US Department of Justice filed a forfeiture complaint to take real estate from the sanctioned Russian, Viktor Vekselberg. Angelika Hellweger considers the DOJ’s sanctions activities to date and the likelihood of more enforcement action in the UK and Europe.
Six US properties owned by sanctioned Russian oligarch Viktor Vekselberg shall be seized.
The US Department of Justice (DOJ) alleges that the homes, worth $75 million in total, were the subject of sanctions evasion and money laundering.
Court documents show that Vekselberg used shell companies based in Panama and the Bahamas to purchase the properties, which are in New York, Long Island and Florida. Vekselberg was first sanctioned by the US in 2018 over Russia’s annexation of Crimea and is not allowed to conduct business with American citizens without a special licence.
The forfeiture application says he was aided by an associate, the fugitive Vladimir Voronchenko, who moved at least $4 million into the US to maintain the properties. Prosecutors also say Vekselberg attempted to sell two properties without informing the Office of Foreign Assets Control.
Vekselberg, whose wealth has been estimated at more than $7 billion, had his superyacht and private jet seized in March 2022 as part of efforts to pressurise Russian President Vladimir Putin into ending his invasion of Ukraine.
Since that invasion, the DOJ has seized, forfeited, or otherwise restrained over $500 million in assets belonging to Russian oligarchs and others who allegedly support the Russian regime. These assets have included two luxury yachts, real estate and four aircraft.
The DOJ has transferred $5.4 million from sanctioned oligarch Konstantin Malofeyev to support reconstruction efforts in Ukraine and has indicted more than 30 individuals and two corporate entities accused of sanctions evasion, export control violations, money laundering and other crimes. It has also engaged extensively with foreign and multinational authorities and the private sector to dismantle what it calls “opaque, transnational criminal networks’’.
At this point, the UK’s autonomous sanctions regime is also predicted to expand in both scope and severity. The UK has been building its capacity for sanctions enforcement, with the Office of Financial Sanctions Implementation (OFSI) having more than doubled its number of staff over the past year.
International alignment on such matters will be essential. While coordination emboldens sanctions, any misalignment in terms of timing, interpretation or targets fuels compliance challenges and creates risks for multi-national and multi-jurisdictional organisations.
2022 only saw two monetary penalties imposed by OFSI as part of its enforcement of financial sanctions. Yet more aggressive policing of sanctions against Russia is on the cards as both European Union and UK regulators move to strengthen their enforcement powers. All the relevant players have announced they will go after the sanctions enablers.
The DOJ also has plans this year to go after the enablers, the facilitators and the companies that prop up and help oligarchs hide their wealth, shield it, evade sanctions and capitalise on the dark corners of the global financial system.
Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.