Sanctions: EU heads meet to discuss Ukrainian sanctions, PEP names discussed

The Crimean crisis gained considerable ground over the weekend, as Russian military troupes seized control of the Black Sea peninsula, the Russian naval fleet’s stronghold on the Black Sea. The EU has responded by calling an emergency meeting of Heads of State in Brussels to discuss the latest developments in Ukraine and how to facilitate the necessary de-escalation of the situation. John Kerry, the US envoy will land in Kiev for talks with leaders today, as announced on Twitter.

International envoys to Kiev

As of Tuesday, the US, backed by some Eastern European nations and Sweden, wants to impose punitive measures on Moscow and Washington is reportedly reviewing its trade packages with Moscow. The US, via the Office of Foreign Assets Control, has mentioned imposing diplomatic – travel,communications, closing embassies – and economic – trade, account and asset freezes, transaction prohibitions – sanctions against Russia if it does not pull out of the Crimea. FCA - KYIV Sanctions banner

The Foreign Ministers of France, Germany, Italy and Spain are downplaying trade sanctions in favour of halting travel visa easing rules with Russia. It is notoriously difficult, still, to get a visa to travel independently and without a planned itinerary in Russia. Reciprocally, the EU makes acquiring a Schengen visa difficult for average Russians. Oligarchs, however, appear to have no difficulty in getting visas to stay in the UK.

UKs embarrassing damage limitation

The UK’s position on Russian sanctions was leaked in a document on Monday this week. Unsurprisingly, but rather disappointingly nonetheless, Number 10 Downing Street is carefully trying to figure out how it can limit the damage EU sanctions may cause to the Russian owned billions floating around the City of London. This must have been quite a snub to the EU, coming only days after HSBC in London revealed its plans to circumvent EU bonus rules.

One of the UK government’s objectives was noted in an exposed secret document as: “Not support, for now, trade sanctions … or close London’s financial centre to Russians.”

Ukrainian cash flows

While the political games are playing out in cabinet rooms, banks and money laundering reporting officers should be on high alert for funds surging out of the Ukraine or transferring between the accounts of Ukrainian politically exposed persons (PEPs).

Yanukovich and Sons,

Yanukovich and Sons,

Switzerland, Liechtenstein and Austria have already frozen accounts linked to ousted President Viktor Yanukovich and his son Aleksandr (also spelled  Oleksander) and 12 other Ukrainians. Prosecutors in Geneva are investigating transactions between firms connected to Aleksandr in Ukraine, Switzerland and the Netherlands.

Austria has frozen the assets of  18 Ukrainian citizens including Viktor Yanukovich, “former chief of staff Andriy Klyuev, but not his brother Serhiy.” In the same Reuters’ article, one veteran Austrian banker estimated that while Austria is of interest, far more Ukrainian money has been placed in Switzerland and the UK.

Names

The EUObserver portal posted a list of potential sanctions targets last week. Importantly, this is not the final list of targets; the identities of the individuals sanctioned by the EU will appear in the EU’s official journal once they had been decided. Economic and financial sanctions from the EU could include export and/or import bans (trade sanctions which may apply to specific products such as oil, timber or diamonds), bans on the provision of specific services (brokering, financial services, technical assistance), flight bans, prohibitions on investment, payments and capital movements, or the withdrawal of tariff preferences.

The list includes 38 names of individuals suspected of using force against the Ukrainian people in the recent revolution and members of the so-called Yanukovich ‘familia’ – a close group of contacts which surrounded the ex-President – suspected of embezzling more than EUR9bn from the national coffers since 2010.

Anyone reading the list for information should bear in mind the following caveat:

“The following names were given to this website by Ukrainian civil society activists and opposition leaders, some of whom advised the EU diplomats who drew up the draft list of eight names. EUobserver does not know who is currently designated in the confidential EU text.”

 

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