There are both legal and practical hurdles in the way
, a metals tycoon and Kremlin insider, visited the team designing the Tango, a $90m yacht he had ordered, to oversee its construction. His attention to detail proved his undoing. When Mr Vekselberg came under American sanctions in 2018, his foreign assets were frozen—but not the Tango, which was held via a shell company registered in the British Virgin Islands. Then two engineers at the shipyard remembered the 2011 meeting and tipped off the.
Consider the practicalities of freezing assets first. The central bank’s currency reserves are a relatively straightforward target. More than half of Russia’s reserves are held in the West and have been targeted by sanctions. So far, however, this giant stash is “hindered”, not technically frozen: transactions with the central bank are prohibited, but its funds are not legally blocked.
Moreover, although sanctions are issued by governments, enforcement falls on the private firms—from banks to marinas—that serve the rich. Not all have the expertise to see through tycoons’ obfuscation. Whoever freezes the assets may also have to look after them, which drains resources further. Property needs to be tended to; yachts cost 10% of their value in yearly maintenance.
Western leaders are therefore instead working to expand the list of crimes that warrant seizure. In April the Biden administration introduced a bill that would add sanction and export-controls evasion to the list of offences punishable by the Racketeer Influenced and Corrupt Organisations Act, which was passed in 1970 to crack down on mobsters and allows for ill-gotten gains to be seized.
One such law is the International Emergency Economic Powers Act , which provides legal backing for the current freezes. It does not explicitly grant the president powers to “vest” assets—ie, to change who owns them. But one exception, added in 2001, allows for some vesting in cases where America is engaged in “armed hostilities” with another country. This was used by George W. Bush to seize Iraq’s assets after he invaded the country in 2003.
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