Briefly about global sanctions for corrupt officials

How the UK, the EU, the US and Canada embarked on a crusade against global corruption

article by SERGII KOZIAKOV, PhD (International Law), 

Institute of International Relations at Taras Shevchenko National University of Kyiv

The necessary background

As part of the European Union, the UK was subject to all EU legal instruments, including the mechanism for imposing sanctions. Brexit required that the UK undertake incredibly large-scale work to introduce numerous amendments to national legislation and enter into dozens and hundreds of international agreements.

The first legislative act on sanctions which could not have entirely replaced previous EU sanctions regime was the Global Human Rights Sanctions Regulations that entered into force in in July 2020. These rules allow imposing sanctions on individuals involved in serious human rights violations around the world.

Throughout last year, sanctions imposed by various countries of the world have finally turned both into a competitive instrument of competition in global trade policy and into one of the demonstrative instruments of hot war.

The names of well-known and not so well-known Ukrainian politicians and businessmen, as well as their family members appeared on foreign sanctions lists in connection with interference with other countries' internal affairs, corruption and money laundering.

Our country has been quite notable as well. As Inna Vedernikova, editor of ZN.UA policy section gave an accurate account of NSDC's role in imposing sanctions, “... The President unexpectedly found NSDC to be instrument by which he not only significantly reduced the Parliament's role in decision-making chain, but also put in place political and economic actors who are not in power, but who have learned to use it through bypassing the Presidential cabinet."

Essentials for corrupt actors

However, some events at the end of April which did not attract much attention because of the upcoming season holidays will soon make a lot of big-name people worry not only all over the world but, quite possibly, in Ukraine.

One such event was that on April 26, 2021 a legislative act called Global Anti-Corruption Sanctions Regulations 2021 entered into force in the UK.

Global Anti-Corruption Sanctions Regulations was introduced to allow Her Majesty's Government to impose sanction regimes in order to comply with UN and other international obligations, as well as a number of other goals, including: helping to prevent terrorism; strengthening national security, international peace and security; observance of international human rights, promotion foreign policy goals; promoting respect for democracy and the rule of law.

After the transition period was over, a number of provisions on sanctions came into force, replacing EU sanctions regimes of similar effect. These include regulations containing country-specific sanctions regimes, such as Russia, North Korea and Iran, as well as thematic sanctions regimes, such as those related to terrorism, chemical weapons and cyber activity. These included the 2020 Misappropriation (Sanctions) Rules which replaced three EU regimes regarding misappropriation of public funds in Tunisia, Egypt and – watch out! – in Ukraine.

Why was Global Human Rights Sanctions Regulations adopted in this very version?

Her Majesty's Government has, in fact, announced a full-scale offensive against serious corruption while maintaining good governance, the rule of law and promoting an open society. The UK political establishment believes that serious corruption, wherever it occurs, has a devastating effect on states, markets and societies. It fuels threats to national security; is linked to terrorism, serious organized crime and instability; hinders international trade and investment; undermines sustainable development; threatens democracy and deprives citizens of vital public resources. This sanctions regime is expected to be an important tool to complement broader anti-corruption government action in line with the UK's Anti-Corruption Strategy.

More specifically, this sanctions instrument will enable the government to identify individuals involved in some of the activities designated as the most harmful types of corruption: bribery and misappropriation of property involving government officials.

And here is the main thing for corrupt actors to pay attention to

Now, let us consider why persons concerned in Ukraine, without waiting for season holidays to end, should closely pay attention to the content of Global Anti-Corruption Sanctions Regulations.

The Regulations was adopted on April 26. And that very day, instant response by Janet Yellen, United States Secretary of the Treasury followed. For the sake of exhaustiveness and clarity, please find a long quote from her statement:

“The United States Department of the Treasury welcomes the enactment today of the United Kingdom’s new Global Anti-Corruption Sanctions Regime, which builds upon the success of the United Kingdom’s Global Human Rights Sanctions Regime. This new sanctions regime gives the United Kingdom an authority similar to the United States’ Global Magnitsky program and Canada’s Justice for Victims of Corrupt Foreign Officials Act, which target both human rights abusers and corrupt actors. We stand in close partnership with the United Kingdom in addressing the global challenges of corruption and illicit finance.

Corruption is corrosive to governance and is one of the greatest obstacles to global growth, economic stability, and poverty alleviation. The United Kingdom’s new Global Anti-Corruption Sanctions Regime provides opportunities for the United States and the United Kingdom to take complementary sanctions actions where appropriate, magnifying the impact of our respective sanctions.

U.S. sanctions are more likely to compel changes in behaviour and disrupt threatening activities when pursued in concert with our allies—carrying a more forceful economic impact by disrupting access to the international financial system—and sending a stronger message to malign actors by virtue of our solidarity. The use of sanctions can further incentivize businesses to adopt a more proactive corporate risk and due diligence approach, which takes into account both human rights and corruption issues”.

It is worth paying attention to British instrument as well as thoroughly analysing the European Parliament resolution on Russia adopted two days later, on April 28, in respect of the case of Alexei Navalny, the military build-up on Ukraine’s border and Russian attacks in the Czech Republic (2021/2642(RSP)), which is actually a curtain raiser to the new strategic treaty of the European Union. In paragraph 11 of this Resolution (adopted by staggering majority), Parliament, along with the threat to disconnect SWIFT in Russia, called on the EU and member states “to draw on the UK legislative proposal for a  Global Anti-Corruption Sanctions Regulation, and other similar regimes, and to adopt an EU anti-corruption sanctions regime in order to complement the current EU Global Human Rights Sanctions Regime”.

Thus, it was with the adoption of British Global Anti-Corruption Sanctions Regulations to combat corruption that a decisive step was taken in shaping an informal coalition (consisting of the USA, Canada, the UK and the EU) by so far the most powerful countries in the world to impose sanctions not only against human rights violators, but also against corrupt actors around the world.

How quickly will corrupt actors feel the effect?

It is already working! The day when Global Anti-Corruption Sanctions Regulations came into force, UK Foreign Secretary Dominic Raab made a statement announcing that he had laid before Parliament, under the powers of the Sanctions and Anti-Money Laundering Act 2018, the Global Anti-Corruption Sanctions Regulations 2021. He described this document as "smart tool allowing the Government to target corrupt actors and their enablers." The Secretary also promised to give an Oral Statement to set out the new sanctions regime and publish the first persons to be designated under it.

That very day, a list was published, which included 14 citizens of the Russian Federation, who, according to British authorities, were involved in embezzling $ 230 million from the Russian budget investigated by Sergei Magnitsky, who died in Butyrka remand prison.

Along with Russian nationals, eight people from Guatemala, Honduras, Nicaragua, Sudan and South Africa found themselves on the British sanctions list.

The accounts of these citizens have been frozen. They are also banned from entering the UK.

More about financial sanctions

The rules impose financial sanctions in the form of targeted asset freezes and prohibition to provide cash or economic resources (not monetary assets such as property or vehicles) of designated individuals and ensuring that funds and economic resources are not provided to designated individuals directly, indirectly or in their interests.

If you find that a person or entity with whom you are dealing is subject to financial sanctions specified in the Regulation, you must immediately:

• stop dealing with them;
• freeze any assets you hold for them;
• inform OFSI as soon as possible by sending an email to ofsi@hmtreasury.gov.uk or by calling their general enquiries line: +44 (0) 20 7270 5454.

Important details about the travel ban for corrupt actors' children

The Regulation is intended to impose a travel ban on individuals designated by the Secretary of State for the purpose of immigration sanctions.

Designated individuals will be denied permission to enter or stay in the UK. Any applications they submit for a visa to travel to the UK, including transit applications, will be rejected. Any foreign national who is prohibited from entering under the Regulation and who is currently in the UK will have their UK stay permit revoked and steps will be taken to remove them from the UK.

If you are subject to immigration sanctions and are trying to travel to the UK, carriers must deny boarding.

Can investigators, prosecutors, judges and lawyers find themselves on sanctions list?

It is naive to believe that only government officials and their business accomplices are most often subject to such sanctions.

The list of April 26, 2021 includes A. Kuznetsov, deputy head of the department for combating tax crimes, P. Karpov, former investigator of the investigative department, investigators S. Gordievsky and O. Urzhumtsev, heads of tax inspections in Moscow E. Khimina and spouse of O. Stepanova and V. Stepanov, lawyers A. Pavlov and Y. Maiorova, A. Sheshenya, CEO of "Grand-Aktiv", entrepreneur V. Khlebnikov and others. We draw your attention to the fact that in addition to Russian businessmen, the list includes law enforcement officials and – a specialty of the season – practicing lawyers.

And back in 2012, 16 investigators, 11 judges, 4 prosecutors and even the chief doctor of the Butyrka remand prison were included in the first sanctions list in the case of Sergei Magnitsky drawn up by competent US agencies.

Since Global Magnitsky Program was created in 2017, 243 individuals and legal entities from 28 countries have been included in Global Magnitsky List. They were found guilty of corruption or serious human rights violations.

Only in 2020 sanctions were imposed on, for example, Taban Deng Gai, First Vice President of South Sudan for allegedly arranging and orchestrating the kidnapping and death of a human rights lawyer and opposition figure. At the same time, sanctions were imposed on two Ugandan judges, a lawyer from Uganda and her husband for participating in a corrupt adoption scheme in which Ugandan children were taken from their families as a result of false promises to provide education abroad.

In the same year, sanctions were imposed against officials and their families from China, Gambia, Sudan.

The role of Andrii Kryvoruchko, judge of the Tverskoi District Court of Moscow in the Magnitsky case is summarized as follows: “The judge who twice authorized the extension of Serhii Magnitsky's detention without holding a hearing on January 19, 2009, and September 14, 2009 and rejected Magnitsky's motion for treatment and his appeal regarding tortures he was subjected to in custody, unlawful harassment and detention by the officers against whom he testified.

Subsequently, the "Magnitsky List" has been supplemented on numerous occasions. It included persons not directly related to the "Magnitsky case", but involved, in the opinion of competent US agencies, in human rights violations. Since 2016, the rules according to which the list was drawn up and supplemented have been extended to the whole world. The Global Magnitsky Human Rights Accountability Act empowers the President of the United States to impose economic sanctions and deny entry into the United States for any foreign national found to be involved in human rights violations or corruption.

Cherry on the sanctions cake

In all countries exemplified in this article, for sanctions to be imposed, indictment by a court or disciplinary body against a government official, prosecutor, investigator, lawyer, judge, and doctor is NOT REQUIRED.

Thus, one can confidently conclude that despite BREXIT united Europe not only maintains, but also strengthens close relations with Great Britain in global fight against corruption and is ready to immediately utilize piping hot developments in this area in practical terms. Moreover, if one also recalls strategic similarity in how Great Britain, the United States and Canada regulate imposition of sanctions in the fight for human rights and against corruption, we can say that there is sanctions alliance of three common law countries and countries of continental Europe which are members of the most influential integration association in the world.