Russia-related sanctions add urgency to one of the most complex, and largely unresolved, questions in the law and policy of targeted sanctions. Should the buck stop with the individuals involved in sanctionable conduct or should asset freezes and travel bans also be imposed on their family members?
Take the example of Sergei Lavrov, Russia’s long-standing – or should I say long-lying? – foreign minister who has been subjected to US, EU, UK, Canadian and Australian sanctions. Based on an investigation by Alexei Navalny’s anti-corruption foundation, The Times gave us a glimpse into the charmed life of a young woman in London reported to be Lavrov’s stepdaughter. Unable to rejoice in her good fortune, some British MPs have called for sanctions to be extended against Lavrov’s family. Meanwhile, French activists broke into a villa in Biarritz that allegedly belongs to Vladimir Putin’s daughter, prompting some bemusement as to why Putin’s offspring have not yet been sanctioned. These are but some instances of situations that make one revisit the appropriateness of, to use a Biblical cliché, visiting the sins of the fathers on their sons (or daughters).
US Landscape
Sanctions are used against a myriad of corrupt officials, human rights abusers, suspected terrorists and even cybercriminals. Internationally, there is an ever-growing consensus on both the array of wrongdoing that merits sanctions and, to an extent, individuals who should be targeted in coordinated designations. However, there is no consistency at all on the issue of whether primary perpetrators’ family members should likewise face sanctions. Even within a single state, different solutions can be found across various sanctions programs.
Let’s take the United States. Executive Order 14024, which is the basis for most of the recent U.S. measures against Russia, allows imposing sanctions on ‘a spouse or adult child of any person’ whose property is frozen under its other provisions. It also applies to those ‘have materially assisted, sponsored, or provided financial, material, or technological support’ for sanctionable activities, which can capture a broader range of primary target’s entourage, including but not limited to family members. This is in common with some of the earlier sanctions authorities, such as those related to Myanmar.
Conversely, no provision is made for sanctioning family members under either the Global Magnitsky Act 2016, they key statute authorizing corruption and human rights sanctions, or the Magnitsky Act 2012, its earlier, Russia-only version. Compare this with US immigration sanctions under the ‘anti-kleptocracy’ provisions under section 7031(c) of the annual appropriations act. Like the Global Magnitsky Act 2016, they are predicated on corruption or human rights abuse. However, section 7031(c) requires sanctions against ‘immediate family members’. In line with that, all section 7031(c) designations so far have included, whenever possible, primary perpetrators’ family members.
Amidst this fragmented landscape, there are indications of the US drifting towards greater use of sanctions against family members. The pending Global Magnitsky Reauthorization Bill, which would prevent the Global Magnitsky Act from sunsetting in December 2022, would authorise sanctions against ‘immediate family members’, defined as ‘the spouse, parent, sibling, or adult child of the person’.
It is remarkable that, as Congress so visibly grapples with the issue, there have been few if any attempts to articulate the policy behind sanctioning family members or the trade-offs that doing so entails. For some insight into these considerations, we should turn to overseas practice, which is inconsistent but instructive.
International Experience
The UK’s Sanctions and Anti-Money Laundering Act 2018 contains no mention of family members. That said, one of the first designees under its corruption sanctions was Zineb Jammeh, the former first lady of The Gambia. Her placement on the sanctions list was not wholly derivative of her husband’s but a consequence of her actions as she ‘used a charitable foundation and charities as cover for the illicit transfer of funds’. Multiple other similar examples can be found on the UK sanctions list, such as one of the sons of the Belarussian dictator Lukashenka being sanctioned due to his own alleged involvement in repression. The stance taken by the UK is likely to reflect a certain wariness of ‘status-based sanctions’, based on who one is rather than what they do.
The position is different in Australia, the latest Five Eyes’ recruit to the cause of corruption and human rights sanctions. The Autonomous Sanctions Regulations 2011, amended in December 2021, allow for sanctions against immediate family members of those sanctioned for ‘serious violations or serious abuses of human rights’ or ‘serious corruption’. Interestingly, no such option exists for those targeted under other prongs of Australia’s revamped sanctions regime, such as ‘proliferation of weapons of mass destruction’ or ‘significant cyber incidents’.
A Senate inquiry in the run-up to Australia’s recent sanctions reforms had elicited conflicting views on sanctioning family members. On the one hand, Geoffrey Robertson QC, a leading advocate of Magnitsky-style sanctions worldwide, argued that those involved in human rights abuse and corruption often do so to secure a comfortable life for their loved ones; thus to fail to address this reality is to allow them to benefit from the proceeds of their crimes. Furthermore, a concern about family members’ participation in sanction evasion was registered by the Department of Foreign Affairs and Trade. On the other hand, Human Rights Watch was of the opinion that due process demands family members only be sanctioned if there is evidence of them benefitting from the wrongdoing.
Resolving the Dilemma
Taken together, the principle that no one should benefit from their crime, as well as sanctions evasion risks, provide a compelling justification for sanctioning family members. Of course, as relates to the latter, extending sanctions to family members does nothing to foreclose other avenues for evasion, such as using nominee owners. There is, nonetheless, ample evidence that registering property in a family member’s name is an asset protection strategy that is both ubiquitous and, in certain instances, depressingly effective.
All that said, there is a distinctly unsavoury flavour to freezing someone’s assets and constraining their movement solely on the basis of who they are. Think of an estranged adult child with no links to their parents’ wrongdoing. As I have argued elsewhere, one solution is to introduce a rebuttable presumption that family members benefit from the primary perpetrator’s wrongdoing.
This is effectively the approach that the EU’s General Court took in the Myanmar-related case of Tay Za. In deciding whether a son of a prominent businessman was ‘associated with’ the military junta, the General Court ruled that ‘those in charge of major businesses under the military regime (…) could be treated as persons associated with that regime’, and ‘family members of such leading business figures (…) may be presumed [to] benefit from the functions exercised by those businessmen’. It also said, however, that such a presumption ‘can be rebutted if an applicant successfully demonstrates that he does not have a close link with the businessman who is part of his family’.
The Court of Justice struck down the judgment on appeal. It reasoned that, since EU regulations at hand did not make provision for the purported presumption, reliance on it was misplaced. Importantly, this was a matter of interpreting EU rules as adopted by the Council, rather than a view on the suitability of introducing such a presumption in the future. If one were introduced, one can venture a more expansive definition of family members than that of ‘immediate family members’ in the United States, covering – for instance – one’s siblings.
The problems with either of the two alternatives are easily apparent. If specific evidence beyond the mere fact of familial affiliation is required to justify a sanctions designations, it will be difficult to come by, such that a glaring gap remains unaddressed. On the other hand, visiting the sins of a family member unto someone with no opportunity for recourse is simply unfair. As a result, even if a provision allowing the government to do so is on the books, there may be some reluctance to apply it in practice. As we all know, draconian in theory does not always mean widely used in practice.
In short, utilising the rebuttable presumption seems preferable for reasons of both principle and practicability. One would hope that, as policymakers continue to confront the vexed matter of sanctions and family members, we will soon see a cohesive and credible approach to it across major sanctioning powers.
Economic Crime Law 