President Joe Biden announced Thursday a new fleet of sanctions against a handful of oligarchs close to Russian President Vladimir Putin. Cutting the barons of Russian industry off from their billions involves understanding just where their billions are and untangling the web of shell companies and legal tricks they use to hide their wealth.
Biden wants to make it as costly as possible to be in the circle of Russian elites who surround Putin.
“These are people who personally gained from the Kremlin’s policies, and they should share in the pain,” Biden said in a press conference.
Making sure those oligarchs can’t evade that pain is the job of the Treasury’s Office of Foreign Assets Control, or OFAC.
Charlie Steele used to be one of the 300 or so OFAC employees. He said the first step is to update the public list of whom and what U.S. banks should avoid doing business with.
“It could be individuals, companies, banks, vessels. And they put up lots of identifying information, akas, street addresses, vessel numbers,” Steele said.
Russian oligarchs have a lot of akas. OFAC knows those aliases from public documents.
“But also they have access to government information, all the way up to the highest top-secret levels,” Steele said.
Once all that info is posted publicly, it’s really up to banks to make sure anything owned by an oligarch, an oligarch’s alias or the subsidiary of an oligarch’s business is frozen.
Treasury doesn’t really track money movements in real time.
“They set up this apparatus and rely on really the private sector to know where the money is to stop it. And so then it becomes a bit of cat and mouse,” Steele said.
Oligarchs are really clever mice though, especially when it comes to hiding their wealth through real estate.
Amber Vitale, who advises banks on sanctions compliance, said if banned oligarchs were to channel funds through a friend of a friend to buy a Manhattan condo, they’d stand a decent chance of not getting caught.
“If there’s no known connection or easily found connection between the oligarch and that person, I think that would definitely be possible,” Vitale said.
In recent days, Russia has taken offline some of the databases the Treasury Department uses to connect those dots, Vitale said.
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