Spotlight on Corruption and RUSI’s Centre for Financial Crime and Security Studies propose amending the Economic Crime and Corporate Transparency Bill to:
- introduce a duty on persons designated under UK sanctions to disclose all assets held in the UK; and
- criminalise the failure to disclose such assets as a form of sanctions evasion.
This amendment would expand the scope of conduct that constitutes sanctions evasion so that undisclosed frozen assets would potentially be recoverable as the proceeds of crime.
Rationale
In the UK, it is already a criminal offence to evade or circumvent sanctions. This means that any transfers of funds or assets that result from evasion become the proceeds of crime and constitute recoverable property under the Proceeds of Crime Act 2002 (POCA).
However, the lack of transparency around the assets held by sanctioned persons is hindering law enforcement efforts to detect and enforce sanctions evasion. This is compounded by the increasing complexity and sophistication of sanction evasion schemes, as highlighted by the National Crime Agency’s red alert on sanctions evasion typologies by Russian elites and enablers.
Even where sanctions evasion is detected, the property that is recoverable is currently limited to funds moved in breach of sanctions – likely only a fraction of the assets a designated person holds in the UK.
As Jonathan Djanogly MP observed during debate in the House of Commons: “The problem in the UK, however, is that the criminality of breaking sanctions attaches to the quantum of the breach, not to the overall value of the amount sanctioned. For example, if a sanctioned oligarch were to be found with a carrier bag full of sanctions-breaching cash, that cash amount is all that is liable for confiscation, not his wider sanctioned wealth.”
By introducing a new duty on designated persons to disclose their assets, this amendment would expand the offence of sanctions evasion so that more frozen assets could potentially be permanently confiscated. Assets would not be seized on the basis of sanctions themselves, but rather through the active enforcement of the breach of such sanctions.
You can read the full briefing below.