Russia shows the financial transparency long game is being lost

A critical response from across the world to the Russian invasion of Ukraine has been the packages of economic sanctions targeting Russian individuals and the country’s economy. When taken together, they could prompt a transparency revolution with long–lasting implications for the world’s criminal and corrupt.

It is shameful that gross suffering as headline news is what prompts such a revolution. The international community’s response to Russia is shining a light on the power of transparency and financial measures in a crisis.

These sanctions regimes include legislation aimed at stopping the Russian state and major Russian companies from raising finance or borrowing money on capital markets. Asset freezes on individuals and business is another piece of the sanctions puzzle. So, too, is the naming and shaming of individuals to target oligarchs and other kleptocrats across the world.

For example, United Kingdom (UK) ministers, unlike those from the European Union, have been reluctant to name individuals for sanctions. This has prompted some UK lawmakers across parties to use parliamentary privilege to name certain Russian oligarchs that they think should be included on a UK sanctions list.

Similarly, after six years of delay the UK’s Economic Crime Bill was just introduced. It features a new register of overseas entities where foreign owners of UK property—even those bought up to 20 years ago—will be required to reveal their real identities. Other provisions make unexplained wealth orders easier to use and less financially risky for law enforcement authorities to carry out.

While these are significant steps forward for transparency—it may still not be enough in practice.

French authorities recently announced the seizure of a Russian oil czar and close friend and advisor of Russian President Vladimir Putin, Igor Sechin’s yacht worth over $100 million.

The United States President Joe Biden has tasked the Department of Justice with assembling a task force to go after the crimes of Russian oligarchs and to join with its European allies to “find and seize your yachts your luxury apartments your private jets. We are coming for your ill-begotten gains.”

A German ministry recently clarified that a super yacht owned by a sanctioned Russian billionaire Alisher Usmanov had not been seized, despite reports to the contrary, and that it remains in a Hamburg shipyard where work on the yacht has been halted. According to Forbes, the yacht is registered in the Cayman Islands and owned by a company formed in Malta making it difficult to tie it directly to Usmanov for the purpose of sanctions. This is a  common story of secret ownership of assets and companies to evade sanctions and other forms of accountability.

The Russian government and its elite supporters are in the crosshairs of these sanctions and seizures, while new legislation gives politicians and civil society new tools to go after the politically connected. Sanctions are setting a strong precedent, as are asset seizures and financial institutions and business’ blocked access to the Swift international payment system.

Unfortunately, legislation tends to tackle the next crisis rather than the one we are in now. And, while the international community’s recent actions appear to be swift and intended as harsh, its scramble and challenges show it is losing the long game. Let’s hope this is a lesson for governments and lawmakers, because it certainly is for those seeking to maintain wealth and power.