To really rein in Putin’s allies’ wealth, governments should target their financial enablers, a new study suggests.
Targeting the lawyers, bankers, accountants and other financial experts who manage oligarchs’ offshore wealth would be more effective than imposing sanctions on individuals close to the Kremlin, concluded a new academic study that used data from ICIJ.
A year ago, following the invasion of Ukraine, governments around the world responded by imposing a series of unprecedented economic sanctions against Russia, its oligarchs and the political leaders surrounding Vladimir Putin. Western government targeted the oligarchs’ offshore wealth —bank accounts, lavish homes, yachts and businesses – in an effort to exert pressure on Putin.
But the new study, published in February and titled “Complex systems of secrecy: the offshore networks of oligarchs,” said those sanctions “have proved easier to bypass than policymakers expected,” because governments have been “slow to address the enabler problem.”
Instead of targeting oligarchs and their assets, the researchers at Dartmouth College proposed a “more effective and efficient” strategy: sanctioning the professional wealth managers who help the oligarchs stack their wealth offshore, such as bankers, lawyers and accountants. This would be particularly effective with Russian oligarchs, because they tend to employ the same financial advisers and boutique wealth management firms, the study found.
“It is a consequence of needing to keep secrets within the smallest group possible,” Brooke Harrington, a sociology professor at Dartmouth and one of the authors of the study, told ICIJ. “It is likely that Russian oligarchs, for example, have secrets that are very important to keep because some of their wealth might be the proceeds of crimes.”