Summary
In July 2024, the National Crime Agency (NCA) secured the first-ever permanent seizure of sanctioned assets under the UK’s anti-money laundering legislation. This forfeiture of £780,000 followed a long-running investigation into the suspected evasion of sanctions against the Russian oligarch Petr Aven.
A few days after Russia’s full-scale invasion of Ukraine, Aven’s mansion in Surrey needed money. A Cyprus-based bank initiated a payment of $5 million on 28 February 2022, the same day the EU imposed sanctions on Aven. The money arrived a few days later in a UK bank account controlled by Aven’s estate manager, Stephen Gater. This $5 million was the first and biggest of dozens of transfers allegedly made on Aven’s behalf to and from accounts belonging to Gater or Aven’s wife, Ekaterina Kozina, and used to pay for personal and other expenses.
HSBC and Monzo submitted suspicious activity reports to the NCA after detecting “very unusual” spending patterns and financial flows between nine accounts connected to Aven. Acting on this intelligence, the NCA obtained Account Freezing Orders worth almost £1.5 million in May 2022 on suspicion that the funds may have been moved for the benefit of Aven in breach of sanctions against him. The transactions under investigation included the sale of a Bentley and payments to staff at the oligarch’s mansion in Surrey, Ingliston House.
The NCA also obtained and executed search warrants for two properties associated with Aven, during which officers found and seized roughly $80,000 in cash held in various currencies by his associate Stephen Gater.
Aven successfully applied to vary these freezing orders to bring them in line with spending allowances already permitted by the Office of Financial Sanctions Implementation (OFSI) at HM Treasury. But these special licences raised early concern about the transparency and rigour of OFSI’s processes for granting exemptions from sanctions for what many would regard as luxury expenses.
In May 2024, the NCA applied for permanent forfeiture of roughly £1.2 million in six of the nine accounts that had originally been frozen. On 29 August 2024, the court approved an agreement between the NCA and Gater for the forfeiture of almost £800,000, bringing the investigation to a close.
This is the first ever successful forfeiture of sanctioned funds following an investigation into the proceeds of alleged evasion – a major milestone for the NCA and for the enforcement of UK sanctions.
Who is Petr Aven and why did the NCA seize assets linked to him?
Petr Aven is a Russian businessman and billionaire who was sanctioned by the UK on 15 March 2022. Designated in one of the biggest sanctions packages soon after the full-scale invasion of Ukraine, Aven was targeted for his association with Putin and his role at Alfa Bank, the largest private bank in Russia and a key component of the country’s financial services sector.
Aven was named in the 2019 Mueller report into Russian interference in the 2016 presidential elections in the US, reportedly offering to act as an intermediary between Putin and Trump’s transition team. He was also one of the oligarchs called to a meeting with Putin on 24 February 2022, the day of Russia’s invasion of Ukraine.
Aven was a patron of the Royal Academy and the Tate until he was sanctioned by the UK. While he successfully challenged earlier EU sanctions against him, he remains subject to ongoing sanctions in the EU as well as the UK.
Why does this case matter?
- This settlement brings the first-known NCA investigation into the suspected evasion of Russia sanctions to a successful close, but the case also reveals the difficulties that have plagued early enforcement efforts. With expensive court challenges and delays in its investigation, the NCA took two years to reach the point of seeking forfeiture, exposing a gap between the UK’s tough talk on tackling evasion and the complex, resource-intensive investigative work needed in order to get a case ready for trial.
- The NCA’s decision to settle the case was a pragmatic choice to avoid further delay and costly litigation to recoup what, in the end, is a fraction of Aven’s $4 billion wealth. Yet the settlement is also a missed opportunity to address novel questions about how the UK’s sanctions laws and anti-money laws interact.
- The NCA’s two-year investigation suffered a number of setbacks, with Aven’s lawyers accusing the agency of “sloppy homework” from the very beginning. The NCA later lost access to crucial evidence after admitting officers had improperly handled digital devices containing legally privileged material. With similar challenges scuppering the Combatting Kleptocracy Cell’s investigation into Mikhail Fridman, there are serious questions about whether this NCA unit has the top talent and resources needed to deliver on sanctions enforcement.
- This case exposed early teething problems in the coordination between the NCA and OFSI on sanctions implementation and enforcement. An early hearing revealed failures in communication between government agencies regarding the accounts under investigation, with OFSI giving Aven permission to use these funds while the NCA had in fact frozen them as suspected criminal property. Close coordination between agencies is crucial to prevent sanctioned individuals or companies, armed with impressive legal teams, from exploiting cracks in the UK’s fragmented sanctions architecture.
- This case also raises questions around the rigour and transparency of the UK’s licensing regime, with OFSI giving permission for frozen funds to cover Aven’s household expenses of at least £600k per year. Permitting a sanctioned oligarch to maintain their luxury lifestyle – with private tuition fees, theatre trips and salaries for personal staff – sends mixed messages about the toughness of the UK’s sanctions regime. While new government guidance in June 2024 suggests OFSI has tightened its policies and scrutiny of licensing applications, the continued lack of transparency about its decision-making undermines public confidence in the licensing system.
Global context
The EU imposed sanctions on Aven on 28 February 2022, shortly before the UK designated him on 15 March 2022. Aven was only sanctioned by the United States on 11 August 2023.
The UK faced major political pressure from the international community to roll out sanctions as quickly as possible after Russia’s full-scale invasion of Ukraine. Yet as the UK and allies scrambled to get these measures in place, many oligarchs succeeded in moving funds before sanctions hit them. Aven exploited the two-week gap between EU and UK sanctions against him by moving significant funds from an Austrian bank account to UK accounts with the assistance of a Cyprus firm Abacus Ltd.
In April 2024, Aven, along with fellow billionaire Mikhail Fridman, had the EU sanctions designations made in February 2022 annulled by the Court of Justice of the EU (CJEU), following a successful legal challenge. They argued that their links to President Putin were not sufficiently evidenced by the EU Council. However, Aven and Fridman were both subject to a further designation by the bloc in March 2023.
Aven and Fridman have been subject to sanctions in the US, Australia, Canada and New Zealand.
Details of the UK case
The £780,000 ultimately forfeited in this case is a small amount compared to Aven’s overall wealth, estimated to be over $4 billion, but the case represents a significant milestone in the NCA’s efforts to seize assets that may have been used in dodging sanctions. It shows that the UK is not afraid to pursue deep-pocketed oligarchs for potential sanctions breaches and this first victory should encourage greater ambition, resources and strategic thinking for how the UK can use civil recovery tools alongside sanctions.
The way the case unfolded in the courts reflects the complexities and challenges of enforcing sanctions. The NCA’s investigation took two years to progress, faced numerous court challenges and setbacks, but ultimately secured the ground-breaking forfeiture of £780,000 in funds the agency believes were being held in breach of sanctions against Aven.
The NCA freezes accounts and seizes cash linked to Aven
In early May 2022, the NCA obtained nine AFOs against a range of accounts linked to Aven: two against Ingliston Management Limited, one against against Lodge Security Team Limited, three against his associate Stephen Gater, one against his wife Ekaterina Kozina, one against Wentworth Maintenance, and one against SWJL Properties. These AFOs, in total, covered almost £1.5 million in funds that were alleged to be the proceeds of crime or intended for use in unlawful conduct, namely assisting with sanctions evasion.
As part of their frozen funds investigation into Petr Aven, the NCA uncovered a list of ten suspected sanctions breaches, including transactions to fund a £200,000 payment to two car dealers and a £160,000 transaction in an alleged attempt to conceal the sale of a Bentley.
The NCA also secured two cash seizure orders against Aven’s associate, Stephen Gater, after carrying out searches on two different properties in May 2022. NCA officers found cash held in a range of currencies totalling approximately £80,000 that was suspected to be held for Aven’s benefit.
The NCA fends off costly challenges to the AFOs
Meanwhile Aven was granted licences from OFSI to draw on funds in his corporate accounts for household expenses. Court documents revealed that these licences permitted payments for expenses reaching over £600k per year, despite these same accounts containing the suspected proceeds of sanctions evasion.
On 23 June 2022, two companies linked to Aven (Ingliston Management Limited and Lodge Security Team Limited) applied to the Westminster Magistrates’ Court to set aside the AFOs blocking the use of their funds, or at least to bring the AFOs in line with the OFSI licences.
They argued that the NCA failed to tell the judge who imposed the freezing orders that OFSI authorised the use of some accounts to cover Aven’s expenses. The NCA admitted this mistake, but insisted the freezing orders were still justified on the strength of the evidence placed before the court.
On 18 July 2022, District Judge Zani rejected their bid to toss out the AFOs altogether, but he agreed to vary them in line with the OFSI licences. Judge Zani agreed that the NCA should be given more time to conduct the “complex” inquiry, including an investigation into allegations that Mr Aven’s wife had been paying Aven’s living costs since he was placed under sanctions.
Both sides were unhappy with this outcome, however, and challenged the decision in the High Court. Handing down its judgment on 19 October 2022, the High Court ruled that the District Judge Zani applied the wrong legal test and sent the matter back to Westminster Magistrates’ Court for a fresh hearing.
Further setbacks in the NCA’s investigation
Further hearings in the case brought to light serious challenges that the NCA faced during its investigation. On 9 May 2022, devices were seized from Aven, his companies and his associate Stephen Gater including phones and computers.
Yet while the NCA was informed of the sensitivity of information on these seized devices arising from legal professional privilege, this information was mishandled when NCA officers reviewed the material on an estimated 20 devices. The return of these devices reduced the avenues for the NCA’s investigation and hindered the progress of their case.
The NCA settles for the forfeiture of £780,000
Only six of the nine AFOs were renewed on 5 May 2023, together with the two cash seizure orders against Gater. A year later, the NCA finally lodged an application to forfeit the remaining frozen accounts and seized cash, together totalling approximately £1.2 million.
Before going to court to prove their case, however, the NCA settled the matter with Aven’s associate in an agreement approved by Westminster Magistrates Court on 29 July 2024. Stephen Gater agreed to the forfeiture of £783,827.34, which included funds in three accounts and a little over £15,000 in cash which had been seized by the NCA at Ingliston House.
Court documents
Westminster Magistrates’ Court
Application by Petr Aven for anonymity order
- Ingliston Management Ltd and Lodge Security Team Ltd v National Crime Agency (Petr Aven as an interested party), judgment of District Judge John Zani dated 8 July 2022
Application to vary or set aside the AFOs
- Ingliston Management Ltd and Lodge Security Team Ltd v National Crime Agency, judgment of District Judge John Zani dated 18 July 2022
High Court
Application for judicial review of decision to vary AFOs
Further court documents can be requested by emailing info@spotlightcorruption.org.
Related Spotlight commentary
- Press release: “UK court rules frozen funds can be used to pay sanctioned Russian billionaire’s luxury expenses” (18 July 2022)
