Updated on
Apr, 24 2024
Maryna Mkrtycheva
Written by
Kendall Coffey
Researched by

Red Notice Asset Freezing Defense

Several oligarchs in Russia have been found to have assets that are frozen by Russian tax authorities. These are believed to have been used in their corrupt and criminal activities.

Getting your hands on a cool new iPhone 6 might not be on your list of priorities, but if you can’t have your cake and eat it too, a little legal wrangling is the next best thing. Seizure of assets might be required to maintain some form of deterrence, and/or might play a role in an anti-corruption effort.

The most important question is why. Is there any legal framework to justify the seizure? In this context, we could be talking about any number of reasons, from security concerns to a growing competition for geostrategic influence. A savvy lawyer will be able to pick apart the relevant legal elements to arrive at a sound decision. For example, in the US, the Fifth Amendment prohibits the taking of private property for public use without compensation. Similarly, the United States relies on sovereign immunities from other nations.

The same logic applies to the executive branch’s decision to transfer control of the Afghan central bank to the Afghan government. In the US, a similar feat was achieved in the case of Venezuelan assets.

Constitutional provisions that could complicate efforts

Attempting to seize Russian assets is not without legal obstacles. These obstacles arise from various constitutional provisions. For example, the Takings Clause prohibits taking private property for public use without compensation. The Fifth Amendment requires a notice to the property owner before seizure. The FSIA may also have an impact. The FSIA’s legal protections apply only to judicial proceedings, and are not applicable to asset seizures without judicial enforcement.

The Biden administration has been pursuing civil forfeiture and seizing Russia-related assets. The administration has also proposed changes to the criminal law to better punish corrupt dealings with Russia. It is not clear whether these changes would meet the requirements of the Due Process Clause. These issues are not fatal to proposals to seize Russian assets. However, the United States should be careful to explain the legal rationale for these efforts and maintain a common understanding of the applicable legal framework.

Another issue is the structure of the seizure. For example, it is not clear whether a Takings Clause violation occurred when the federal government seized and transferred the property to a third party. In the same way, it is not clear that the Takings Clause requires just compensation for foreign state property.

Russian oligarchs’ frozen assets are implicated in their corrupt and criminal activities

Several Russian oligarchs have been designated by the U.S. Department of Treasury, the Office of Foreign Assets Control (OFAC), and the International Emergency Economic Powers Act (IEEPA). These individuals are believed to be benefiting from President Putin’s corrupt regime.

These actions are part of the Trump administration’s global efforts to isolate and sever Russia from the global economy. They are designed to impose serious costs on the country, including through the seizure of its assets.

To seize property, a government must establish a crime and show that the property is related to the crime. It is also essential to obtain court approval for the seizure.

The United States, in addition to other Western states, has frozen a substantial amount of the Russian government’s assets. This includes seized real estate, artwork, helicopters, and aircraft.

These assets do not necessarily link to war crimes in Ukraine, and many are not linked to criminal activity in the U.S. However, they can serve a variety of purposes, such as deterrence, punishment, restitution, and anti-corruption efforts.

In addition to these services, our economic sanctions attorneys are skilled in providing legal guidance and representation to clients facing sanctions-related challenges worldwide. Whether you require assistance from our sanctions lawyers in London or need a consultation with our sanctions solicitor team, we are here to provide the support you need.

Kendall Coffey
Kendall Coffey
I have a long standing passion for criminal law, human rights issues, and politics, all of which are relevant to the practice of Interpol Red Notice defense. While few attorneys have experience with successfully challenging Red Notices, I do.
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