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in pursuit of Russian assets

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Amidst the chaos, the scene went relatively unnoticed. This Saturday, February 26, it is 2 a.m. when a 127-meter-long freighter, with 19 crew members, flying the Russian flag, is boarded by French customs off Honfleur (Calvados), before being escorted by a Navy patrol boat to the port of Boulogne-sur-Mer (Pas-de-Calais). Leaving Rouen, the Baltic Leadera freighter specializing in the transport of vehicles, was headed for St. Petersburg.

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Something “never seen” for the inhabitants of Boulogne-sur-Mer. Behind the Baltic Leader There is a subsidiary of PSB Lizing, one of the largest Russian banks targeted by Western sanctions. “In recent history, there are very few arrests of this kind, the confiscation of movable and immovable property being rather reserved for criminal cases”, confirms lawyer Olivier Dorgans, of the firm Ashurst.

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Hitting the elite in the wallet to isolate Putin, going so far as to seize the yachts, jets and other luxurious villas of the Russian oligarchy… after several days of dithering, the Westerners have brought out the heavy artillery. For the time being, 488 personalities, natural or legal, are targeted by the sanctions, in addition to the Russian central bank, part of whose 600 billion dollars in foreign currency assets were frozen this weekend by the banks. western centers.

Banks at the heart of the system

But how are these sanctions implemented, and who are the actors responsible for enforcing them? At the heart of the system, banks, and all financial institutions, insurers, asset managers, subject to regulations related to international sanctions. Every day, the General Directorate of the Treasury updates the list of personalities and entities targeted by sanctions. Institutions have 24 hours to comply.

“Technically, financial institutions have very powerful software to review the identity of account holders and beneficiaries of financial transactions”, says Nicolas Fleuret, at Deloitte. In detail, the software uses “fuzzy logic” tools, i.e. the names will be analyzed with all the possible spellings (Puthin, Poutin, Poutine, etc.) and using all the aliases provided by the Treasure.

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“Since 2017, banks have been required to identify the natural persons behind the accounts and financial transactions, which greatly simplifies these exercises”, adds Julien Martinet, from Swift Litigation. When the alert systems turn red, the compliance departments notify the Treasury and freeze the related sums in a dedicated account.

But contrary to what one might imagine, financial institutions are not the only ones required to respect the international sanctions regime. All professions subject to money laundering regulations – lawyers, notaries, real estate agents, art dealers or gaming operators must comply with them.

“In addition, each company wishing to trade with Russia must verify that its client, or the shareholder of its client, is not targeted by a sanction”, recalls Olivier Dorgans. To answer their questions, the Directorate General of the Treasury has also set up a special system dedicated to the Ukrainian crisis.

Task force to identify the oligarchs

Added to this is another more sensitive, and less proven job: tracking down the “hidden” assets of the oligarchs. Because, most of the time, these rich billionaires contract via nominees and shell companies. Vladimir Putin is particularly known for not holding any assets in his own name.

According to Bercy, all the French intelligence services, from Tracfin to the DGFIP via customs, would be hard at work to identify the properties of Russian oligarchs based in France. “We have extended our search to the names of the spouses of the oligarchs, their children and their SCIs, so that no one can slip through the cracks”, detailed Bruno Le Maire this Tuesday on France Info.

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“What is certain is that there is agitation everywhere and especially in London, where private mansions are in the sights of the authorities”, relates Olivier Dorgans. According to certain rumours, the closure of European skies this weekend would have been precipitated by the multiple round trips of private jets between Europe and Moscow.

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From freezing to confiscation

Still, in theory the freezing of assets does not constitute a forfeiture of property, but a simple immobilization of assets. This Tuesday, Bruno Le Maire announced that the government was studying the legal possibility of going further, to confiscate all the property of the oligarchs targeted on French territory.

In the past, certain embargoes have led to this type of confiscatory seizures. After the war in Iraq, the UN decided to donate the assets of Saddam Hussein’s relatives to a Development Fund for Iraq. These sums are still the subject of an international lawsuit. More recently, the United States seized $7 billion in assets from the Afghan central bank, with the intention of redistributing them to the victims of 9/11. The UN is pushing for them to benefit humanitarian institutions in Afghanistan.

In France, the communist candidate Fabien Roussel has just made a rather unexpected proposal: to requisition the luxurious residences of the Côte d’Azur to help the refugees… As determined as it is, it is unlikely that the government will go that far .

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The list of sanctions is growing

While the ruble has now lost a quarter of its value for a week, the Moscow Stock Exchange has still not reopened. The authorities have decided to suspend trading until March 5.

Major groups are leaving the Russian market: shipping giants Maersk and MSC will no longer serve Russian ports; Disney and Sony Pictures suspend theatrical release of their films; the Swedish truck manufacturer Volvo Group interrupts its production in the country, and the British giant Shell is parting with its shares in several joint projects with the Russian Gazprom.

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