Economic Sanctions European Union Russia United Kingdom

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May 14, 2021

Global Sanctions Dashboard: April

By Julia Friedlander, Michael Albanese and Castellum.AI

In the previous edition of the Global Sanctions Dashboard, the GeoEconomics Center examined how China retaliated in response to Western measures over the Uyghur genocide and the international response to the military coup in Myanmar, where pressure continues to mount. This month we’re turning back to Russia— not with a focus on how the West sanctions Russia, but how Russia views sanctions—there’s a big difference. The Dashboard will unpack how for many, sanctions are law enforcement, not foreign policy, and how the multilateralism of UN sanctions is hard fought but worth it. We’ll also tip our hat to the UK’s deployment of Magnitsky sanctions and its new anti-corruption authority.

1. Sanctions as Law Enforcement – Zoom in on Russia
2. The UK Adds a Post-Brexit Boost to Magnitsky
3. UN Designations – The Sanctions Gold Standard 
4. Maintaining Pressure on Myanmar

Sanctions as law enforcement – zoom in on Russia

As discussed in the previous edition, countries such as India and Qatar often use sanctions not to exert pressure on foreign states, but as a domestic law enforcement mechanism. Russia, in particular, tends to rely on sanctions for domestic order. On the projection map above, you’ll notice that in total numbers Russia’s designations outstrip the US–the otherwise notorious scion of sanctions. Rosfinmonitoring, Russia’s main sanctioning authority, runs the country’s Terrorists & Extremists list, which consistently has the most designations and delistings in our monthly analysis. 

Why is this? The Financial Action Task Force (FATF), the international body evaluating global anti-money laundering and terrorist finance regimes, reported in December 2019: “Russia has a strong understanding of its domestic and international terrorism threats” and has developed a robust legal framework to address them.” The report concluded that Rosfinmonitoring applies “dissuasive, proportionate and effective criminal sanctions” against individuals suspected of terrorism, financing terrorist activities, or laundering money.” These operations, FATF added, are “afforded the highest priority by the Russian government.” 

But remember, the FATF evaluates countries based on their own perception of risk. Western governments and independent human rights groups question how the Russian judicial system defines a ‘terrorist’ or ‘extremist,’ and certainly when this justification is a pretext for politically motivated agendas. Last week, Alexei Navalny’s political network saw its activities suspended while a court deliberates whether the group is a “terrorist-linked” organization. To external and independent Russian audiences, the move is an overt attack on opposition voices and anti-corruption activists across Russia. Last year, Svetlana Prokopyeva, a freelance journalist, was added to Rosfinmonitoring’s Terrorists & Extremists list for criticizing Russia’s security services. The Russian government has also listed as terrorists over 400 chapters of the Jehovah’s Witnesses in Russia, leading to widespread legal harassment, arrests, and financial freezes for the group and its members in the country. 

However, in spite of these examples, Rosfinmonitoring does play an important role in supporting law enforcement agencies in combating terrorism threats—especially from Chechnya and Dagestan, and has cooperated internationally on Al-Qaida and ISIS. Rosfinmonitoring also implements UN nuclear non-proliferation campaigns against both North Korea and Iran. In such cases, counterterrorism sanctions act largely as an extension of law enforcement. 

Sanctions as a law enforcement tool is not uncommon. This month, OFAC delisted 45 entities and six individuals from its Foreign Narcotics Kingpin list and designated an additional two entities and four individuals under that same program. It’s worth a reminder here that the US does freeze assets pending criminal investigation—but the judiciary follows a separate legal procedure and doesn’t name them, hence we don’t call these sanctions. France operates a domestic sanctions program that supports its law enforcement agencies in counter-terrorism efforts, as do the Netherlands and Belgium. These designations reflect the more technocratic nature of sanctions that often gets overlooked among more politically charged actions. But, there are several aspects of Russia’s sanctions programs that stand out. 

First, of course, is the scale. Russia sanctions more individuals than any other country by far. Second, the lack of due process for designations and minimal independence of the judicial system distinguishes Russia’s use of sanctions from other major listing authorities—where the focus is often more on foreign policy than domestic concerns. 

This means that Russia may misunderstand (perhaps willfully) how Western sanctions against the Kremlin are intended to dissuade, not merely punish, Moscow’s “malign” activities. Hence many argue at the Atlantic Council that articulating a clear endgame—tied to specific behavior—with sanctions is pivotal to achieving their intended effect. The Kremlin sees sanctions as a tool for domestic order and likely does not appreciate Western standards of due process or legal threshold. If Moscow sees sanctions as a form of control, Western measures against the Kremlin are, ostensibly, there to control Russia. As the Biden administration seeks a more stable and predictable relationship with Moscow, understanding how these two countries take a vastly different approach to sanctions may offer insights into how the Kremlin is interpreting US policy. Unsurprisingly, the Kremlin uses these actions to forward a narrative among its domestic audience and global sympathizers that Russia is the aggrieved party. 

Last month, the Biden administration introduced a sweeping executive order calling out a wide range of the Kremlin’s recent foreign activities, from cyber attacks on the US to regional military aggressions, including several addressing Russia’s ongoing occupation of Crimea coordinated with Australia, the United Kingdom, Canada, and the European Union. Russia responded measure for measure against “Western aggression” much in the same way that it banned the import of European food products in 2014 responding to EU sanctions over Ukraine. 

The UK adds a post-Brexit boost to Magnitsky

When the United Kingdom unveiled its new Anti-Corruption Sanctions Regime on April 26, the government designated 22 individuals across three continents for their involvement in corrupt practices. This authority replaced an earlier regulation authorizing sanctions for the misappropriation of state funds and has enhanced the UK’s ability to cooperate and coordinate with the US in combating global corruption. Previously, the UK’s Magnitsky regime derived from the EU’s authority on human rights—which alone cost Brussels a long political fight since any member state can veto an EU foreign policy proposal. Under the UK’s new regime, the British government is now able to act autonomously in designating corrupt actors and their enablers.

14 of the 22 individuals sanctioned by the UK are Russian nationals involved in the misappropriation of the equivalent of $230m of Russian state property via a fraudulent tax rebate scheme. This was uncovered by Sergei Magnitsky, whose death at the hands of Russian authorities led to the Magnitsky and Global Magnitsky Acts in Washington, authorizing sanctions over corruption charges and human rights abuses. The UK has signaled its intention to ramp up its efforts in fighting kleptocrats and, in the words of Foreign Secretary Dominic Raab, ensuring that the UK is “not a safe haven” for corrupt actors and their ill-gotten gains. The designations also target actors in Africa and Latin America. This authority fits well with the apparent intention of the Biden administration to focus on sanctions and other tools of economic statecraft to target corruption and illicit financial flows.

UN designations – the sanctions gold standard

United Nations sanctions are crucial to building a strong multilateral campaign, most simply because they mandate implementation and enforcement by all members. Each sanctions program is administered by a committee chaired by a non-permanent member of the Security Council (UNSC). For a sanctions resolution to pass, it needs nine votes in favor and no vetoes from the five permanent members (US, UK, France, China, Russia). Currently, there are 14 UN sanctions programs that are targeted towards conflict resolution, counter-terrorism, or nuclear non-proliferation. Despite political tensions with Russia and China over the last decade that have eroded the potential scope of UN sanctions, a common denominator remains for counterterrorism—again, a sanctions sibling of law enforcement. Out of the 30 sanctions programs the UN has established throughout its history, 19 have been against an African government or organization, notably a region without a permanent member on the UNSC.

While the UN lacks an official enforcement mechanism and it’s fair to say many countries do not actively comply, UN measures can serve as an official justification for third country unilateral action, drawing on the UN’s multilateral gold standard. For example, the US recently targeted Chinese firms for conducting business with UN-sanctioned entities involved in North Korea’s nuclear programs. Citing UN authority, the United States threatened to impose additional sanctions if these firms continued to engage with these entities. 

The process for getting off a UN sanctions list typically begins at the UNSC’s Focal Point for De-listing, which receives delisting requests from petitioners and forwards the request to the reviewing governments (ISIS and Al-Qaida sanctions petitioners must submit delisting requests through the UN ombudsperson). Over the past month, the UN delisted six entities from its Iraq list and one entity from its Central African Republic list with agreement from all UNSC members. Once officially off, the UK, Switzerland, Australia, and France all followed suit. Because these sanctioning authorities complied with the UNSC’s designation, they also followed its delisting. For us, it’s instructive to see this trickle down through the data.

Maintaining pressure on Myanmar 

As the situation in Myanmar retrenches, the Western sanctions consensus (click link for more) against the military junta continues to build. This month, Switzerland and the EU each designated 10 individuals and two entities involved in the coup and subsequent crackdown against peaceful demonstrators. The United States also designated three entities that directly provide financial support to the military junta: Myanma Gems Enterprise, Myanma Timber Enterprise, and Myanmar Pearl Enterprise. 

For now, it remains uncertain whether the international community will be able to pressure the junta effectively without stronger multilateralized sanctions. UN Special Envoy on Myanmar, Christine Schraner Burgener, has called for sanctions against the junta, but no effort has been made by the UNSC to discuss a sanctions resolution. Referencing our discussion above, it is unlikely that today’s China will allow the UN to reinstate a global embargo.

Methodology

Castellum.AI  obtains global sanctions information from primary sources, and then proceeds to standardize and clean the data, extract key information like IDs and addresses from text blobs, and enrich the entries with additional information. Castellum.AI enriches as many as fifteen separate items per entry. This analysis is based on the enriched primary source data that populates our database. The database consists of over 600 watchlists, covering over 200 countries and six different categories (sanctions, export control, law enforcement most wanted, contract debarment, politically exposed persons and elevated risk). Castellum.AI updates their watchlists every five minutes directly from issuing authorities.  

Canada and Russia do not use unique IDs for their list which creates challenges relating to tracking changes over time. Many lists have individuals with the same name, and Castellum.AI uses various formulas and methods to identify unique entries. In addition to our algorithms, for Canada Castellum.AI can cross reference press releases, which announce name changes, additions and removals. Russia, however, does not publish press releases and their sanctions lists lack consistent structure. As a result, when Russia changes entries, they are often dropped and returned as a new one, potentially leading to higher add / drop numbers than other lists.

Michael Albanese is a Research Consultant for the Atlantic Council’s GeoEconomics Center and recently graduated from the University of Maryland, where he studied geoeconomics with a specialization in Russian foreign policy.