Magnitsky-style sanctions in the Eastern Partnership

The growing popularity of legislation sanctioning human rights abuses and corruption worldwide has begun to affect the countries of the Eastern Partnership. Georgia, Moldova, and Ukraine have all recently echoed Western states’ rhetoric on upholding the rule of law abroad, proposing bills that target foreign kleptocrats and corrupt officials. They have done so largely out of concern for national security and as a show of solidarity with the international community.

These developments owe much to the activism of the US Congress, which (in a rare show of bipartisanship) passed in 2016 the Global Magnitsky Human Rights Accountability Act. Based on the 2012 Sergei Magnitsky Rule of Law Accountability Act, the 2016 law expanded the scope of US asset freezes and visa bans from Russians involved in the murder of its namesake to those guilty of human rights abuses and corruption around the world. This prompted the United Kingdom, the Baltic states, and Canada to implement Magnitsky-style legislation. Australia and South Africa are currently debating their own versions of the law. Similarly, the European Parliament recently backed a resolution that would introduce sanctions for grave human rights violations involving systemic corruption. Initiated by the Dutch government, the proposal awaits a decision in the Working Party on Human Rights, in the Council of the European Union. If it passes, the legislation will reinforce the EU’s credibility as a  global advocate of human rights and increase its visibility in the fight against corruption.

Limited national legislation

The focus of the Magnitsky-style laws in Georgia, Moldova, and Ukraine differs according to local dynamics. Domestically, the three pieces of legislation suffer from a lack of judicial independence, strong law enforcement agencies, and the political will to fight corruption. Nonetheless, they all attempt to tackle human rights abuses or corruption in various ways.

Moldova’s version of the Global Magnitsky Act emphasises money-laundering. Plagued by a series of corruption scandals, the country’s banking and judicial systems have repeatedly fallen victim to regional organised crime groups. For instance, in November 2014, around $1bn vanished from three Moldovan banks. And corrupt Moldovan judges were later revealed to have facilitated the Russian Laundromat scheme by certifying $20bn in debt. Thus, Moldovan opposition parties view Magnitsky-style legislation as an instrument for shielding the domestic financial system. Modelled on the Global Magnitsky Act, the Moldovan bill bans the entry into Moldova of people who “have committed or contributed to human rights violations and particularly serious acts of corruption that are harmful to international political and economic stability.” As a depoliticised and impartial piece of legislation, it clearly defines human rights abuses and corruption, establishes evidentiary standards and periodical reviews of sanctions listings, and details the global applicability of its measures.

While Magnitsky-style sanctions will act as a powerful deterrent to illicit financial activity in the future, strengthened anti-money laundering regulations in the West will halt the outflow of ill-gotten gains in the first place

However, the proposed law has been stuck in parliament since July 2018, with the ruling Democratic Party of Moldova showing little interest in passing it. Moreover, the party recently approved a package of fiscal reforms that could jeopardise the anti-money laundering provisions of Magnitsky-style legislation, providing a tax amnesty for previously undeclared income or goods if their owner pays 3 percent of their value to the state. Warnings from international donors and civil society activists that such legislation will be used to launder illicit assets appear to have gone unheeded.

In contrast, Ukraine’s Magnitsky-style legislation focuses exclusively on human rights violations. Since 2014, when Russia illegally annexed Crimea and launched a hybrid war in eastern Ukraine, there has been a steady rise in violations of the human rights violations of Crimean Tatars, as well as Ukrainian citizens living in Russia. The Russian authorities have illegally detained more than 80 Ukrainian citizens in Crimea – prosecuting some of them in politically motivated cases – and 24 Ukrainian prisoners of war captured in the Kerch Strait in 2018.

In an attempt to draw attention to Russia’s gross falsifications of evidence, illegal investigations, and use of torture, a group of the Ukrainian parliamentarians tabled Magnitsky-style legislation in December 2017. The draft law envisages open-ended visa bans, asset freezes, and restrictions on asset transfers for those who have committed gross human rights violations. Yet the law provides no criteria for sanctions listings and delicately avoids targeting corrupt government officials – or even mentioning corruption. Although it is designed to have a global reach, the draft law currently focuses on sanctioning the 50 Russian citizens involved in Magnitsky’s murder. However, the Ukrainian parliament removed the draft law from its agenda in September 2018 due to a lack of progress.

Human rights measures also feature in Ukraine’s sanctions on Russia, which target individuals responsible for the illegal imprisonment of Nadiya Savchenko, Oleg Sentsov, and Oleksandr Kolchenko. Petro Poroshenko, Ukraine’s former president, tried unsuccessfully to list those involved in the persecution of other Ukrainian citizens, particularly Crimean Tatars. It is unclear whether his successor, Volodymyr Zelensky, will resume the effort.

The effectiveness of Ukraine’s Magnitsky-style legislation hinges on the transparency of Ukrainian law enforcement agencies. At present, they remain opaque and vulnerable to exploitation. Moreover, the government’s recent decriminalisation of illegal enrichment is a step backwards, overshadowing the minimal progress in anti-corruption reforms Ukraine made with its introduction of electronic declarations of assets. Indeed, after the Constitutional Court struck down the criminalisation of illegal enrichment, the National Anti-Corruption Bureau of Ukraine and the Specialised Anti-Corruption Prosecutor’s Office were forced to end at least 50 criminal proceedings.

Georgia’s Magnitsky-style legislation also focuses on human rights violations, albeit in line with the narrow definition of “individuals suspected and convicted of grave crimes committed against Georgian citizens” in Abkhazia and South Ossetia. Initiated by opposition party European Georgia in March 2018, the resolution also aims to target individuals involved in the “murder, kidnapping, torture and inhuman treatment” of Georgian citizens Giga Otkhozoria and Archil Tatunashvili. The measure imposes visa bans, asset freezes, and other financial restrictions on the 33 people allegedly responsible for the crimes.

Yet European Georgia harshly criticised the eventual composition of the sanctions list, arguing that it should have both included Russians and been expanded internationally, in a similar fashion to the Global Magnitsky Act. The Georgian government has insisted that the list is “not exhaustive” and that “all executioners will be punished” once its investigations are complete. However, Georgian law enforcement agencies are hampered by a lack of accountability, independence, and proper due process – all of which foster impunity for human rights abuses.

Acknowledging the limitations of their countries’ Magnitsky-style sanctions, policymakers and civil society activists in Georgia and Ukraine have reached out to the international community as part of a strategy for increasing the measures’ reach and impact. For example, the Media Initiative Group for Human Rights, a Ukrainian non-governmental organisation, urged the UK Foreign Office Committee to include a list of individuals who violated human rights in Crimea in the UK’s Magnitsky-style legislation. The organisation made a similar approach to the Lithuanian and Canadian parliaments.

Georgian policymakers have sought the support of Western countries in imposing travel bans and asset freezes, as well as in activating restrictive measures via Interpol. This has led the European Parliament and the Council of Europe to fully back the adoption of the Otkhozoria-Tatunashvili sanctions list and to call on Russia to “end impunity and ethnically motivated crimes”. Lithuania has fully cooperated with these efforts, sanctioning some individuals from the Georgian and Ukrainian lists.

Moldovan policymakers also plan to seek support from their Western partners. Andrei Nastase of the pro-European ACUM bloc insisted that they “will demand the punishment of individuals involved in fraud and power abuse from their international partners”. Campaigning strongly against oligarchs and money-laundering, ACUM has pledged to prioritise Magnitsky-style legislation on its legislative agenda.

Cooperation with the EU

Magnitsky-style legislation in Georgia, Moldova, and Ukraine will, if passed, have only a limited directed impact, as their targets have already laundered much of their ill-gotten wealth in the West. However, the measures have important symbolic value in demonstrating the countries’ solidarity with the international community and their commitment to democratic norms and values. The proposed laws are the first of their kind in states with such poor anti-corruption practices and human rights protections.

If they are to effectively implement sanctions, governments in Chisinau, Kyiv, and Tbilisi must demonstrate the political will to reform their judicial systems and law enforcement agencies – which will require them to avoid politically motivated sanctions listings. Diplomatically, the legislation could create a sense of mutual responsibility for sharing the economic burden of sanctions. And it would lend greater credibility to the countries’ demands that their international partners expand sanctions regimes on their behalf.

EU member states can have an enormous influence on these international efforts to curb corruption and human rights abuses. Relying on Western legal systems and financial services, kleptocrats and corrupt officials are often able to move illicit funds through the global financial system, concealing their origin through the use of shell companies and converting them into luxury real estate, investments, and philanthropic donations. The EU should complement restrictive measures with robust anti-money laundering practices, limiting the opportunities for kleptocrats, those guilty of human rights abuses, and their enablers to move illicit funds through the international financial system. While Magnitsky-style sanctions will act as a powerful deterrent to illicit financial activity in the future, strengthened anti-money laundering regulations in the West will halt the outflow of ill-gotten gains in the first place.

Europe has made some progress in this in recent years, in response to a series of banking scandals and – in the UK’s case – the attempted assassination of former Russian intelligence officer Sergei Skripal in Salisbury in March 2018. For instance, the EU’s Fifth Anti-Money Laundering Directive will, when fully implemented, help restrict illicit financial flows by improving the transparency of beneficial ownership through centralised public registers, facilitating cooperation between national financial oversight units, and tightening customer due diligence criteria for high-risk third countries. In the UK, post-Brexit legislation explicitly links sanctions with laundered proceeds of corruption. The country has strengthened its overall regulatory framework by establishing public registers of beneficial ownership in overseas territories, tightening regulations on Scottish limited partnerships, and introducing unexplained wealth orders.

Even if sanctions on those who abuse human rights have rarely forced a change in individual behaviour, the measures send a powerful signal that these people will be stigmatised and ostracised in the West. The impact of the measures can be seen in the Russian government’s retaliation against them, particularly its intense anti-sanctions lobbying campaign in the United States and Europe.

In this context, the proposed Magnitsky-style laws in Eastern Partnership countries could infuriate the Kremlin through personalisation, targeting specific individuals and undermining the international money laundering networks they sustain. By narrowly targeting perpetrators and pinpointing their wrongdoings, the laws could help prevent corrupt government officials and their families from enjoying a comfortable life in the West.

Maria Shagina is a JSPS postdoctoral fellow at Ritsumeikan University, in Japan. She was a visiting fellow at the Centre for Russian, European and Eurasian Studies, at the University of Birmingham, and is currently affiliated with the Geneva International Sanctions Network. She is the author of Joining a Prestigious Club.