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Sergey Glandin: Place in GLOMAG: what new sanctions regulations of US Ministry of Finance mean. RBC, 9 July 2018

The number of Russians included in the US sanctions lists may increase soon - "ordinary" corrupt officials and human rights violators will join those suspected of interfering in the US elections and Ukrainian conflict. 

Information of the US Ministry of Finance about the approval and introduction of special regulations on tackling foreign corrupt officials was almost unnoticed in Russia. It has been unclear in Russia for the last year and a half which American state body is going to play a leading role in execution of the so-called  Sergey Magnitsky Global Act. It is clear now that the main work will be carried out not by the Department of Justice or FBI, but a well-known in Russia Office of Foreign Assets Control (OFAC) which already administers major anti-Russian sanctions connected with the conflict in the Ukraine and accusations of Moscow interference in the elections of the US president in 2016. Adopted regulations establish actions subject to the law - henceforth the sanctions list will be regularly increased - due to the added Russians as well. 

Globalization of list

The beginning of this decision goes back to December 2012 when President of the USA Barak Obama signed the "Sergei Magnitsky Rule of Law Accountability Act" known as the "Magnitsky Act". It happened also due to William Browder, head of the Hermitage Capital fund who escaped from Russia. At present 49 Russians are included in the special sanctions list because the US authorities believe that they are connected with the death of the Hermitage Capital lawyer Sergei Magnitsky when he was on remand, or infringements of the law revealed by him. This sanctions list is called MAGNIT. Later the US legislators decided to spread that logic to corrupt officials and violators of basic human rights from other countries. As a result the "Global Sergei Magnitsky Act" appeared in 2016. However, since no executive body was properly authorized to implement it, the act wasn't  applied for more than a year. That is why Head of the Chechen Republic Ramzan Kadyrov was included in the MAGNIT in December 2017, although he had no connection to the fate of Magnitsky, but fell under sanctions on suspicion of involvement in murders and tortures in the republic. Approximately at the same time, 20 December 2017 the US President Donald Trump signed an executive decree "On prohibition of transactions with property of persons involved in serious human rights violations or corruption" correlating with the Act. It's preamble says: "The USA seek to point out to those who commit serious violations of human rights or are involved in corruption, to tangible consequences, and also protect the US financial system from abuse by those persons". 

The decree was accompanied by a list of 13 natural persons from different countries: Gulnara Karimova - daughter of the ex-president of Uzbekistan, the former president of Gambia Yahya Jammeh, Israeli billionaire Dan Gertler, businessman and arms dealer from Serbia Slobodan Tesic, the former commander of the Kiev "Berkut" Sergey Kusyuk. Our country was represented by the Prosecutor General's elder son Artyom Tchaika, the hero of a famous FTC investigation into business in the family of the Prosecutor General. The new sanctions list got the name GLOMAG. 

Corruption and not only

Regulations of the Ministry of Finance have closed the last gap in the application of the law. It is clear now not only whom it is targeted at and what sanctions may follow, but also who and by what criteria will determine infringers. The GLOMAG list was extended for the first time 5 July - less than a week after the publication of the regulations: three citizens of Nicaragua fell under sanctions - Minister of Interior, vice-mayor of Managua and head of the local oil company. 

The small OFAG structure supervised by deputy Minister of Finance Sigal Mandelker has already proved its efficiency. The body's activity makes dozens of thousands of compliance-managers all over the world start their working day with skipping the news from Washington DC. Getting into the sanctions list may lead to dramatic changes in the "victim's" habitual way of life. Facebook and Instagram immediately blocked accounts of the Head of the Chechen Republic after he fell under sanctions. Oleg Deripaska had to reduce his share in the companies under his control. Kirsan Ilyumzhinov has recently given up his claims to the post of the FIDE Head under pressure of his "sanctions" status. Captain of the Mexican national football team Raphael Marquez who was under the US sanctions had to live separately from the other players during the world championship - there were goods from sponsors in the hotel rooms who didn't want to have anything in common with the person mentioned in the sanctions list. 

Every suspect, but not their close relatives (if they don't obviously contribute to evasion of sanctions) may fall under sanctions in accordance with the CAATSA law (the famous "Kremlin report" was made on its basis). "The Worldwide Magnitsky Act" is based on the logic of anticorruption investigations. E. g., if a state official lives on a modest salary and his 20-year-old son suddenly begins to win all state contracts and becomes a billionaire, these two may easily get into the list under the CLOMAG, but not CAATSA. 

At present the task of the OFAC is to collect information about those who break the sanctions legislation. Initial data are presented by another subdivision of the Ministry of Finance - the Office of counter-terrorism and financial intelligence: who, through which bank and on what grounds transferred suspicious sums of money. The OFAC continues to monitor persons of its interest by open sources. Of course, the leading English-language mass media prevail. Therefore, the Washington Post and Financial Times are worth keeping an eye on in order to find out who out of the Russians appears in the news about investigations. Since the law combines corruption and human rights violation, the OFAC is going to track such traditional human rights topics as discrimination of different kinds of minorities, dispersal of meetings or tortures in prisons. It's quite clear that news on these items come regularly from Russia as well. 

Sergey Glandin, special adviser on sanctions law