Do You Know Where Your Russian Oligarchs Are?

Democratic senators ask major banks to review individuals tied to Putin.

A Capital One bank and Bank of America are seen side bye side near Penn Station in New York on January 8, 2018 in New York. (Bryan R. Smith/AFP/Getty Images)
A Capital One bank and Bank of America are seen side bye side near Penn Station in New York on January 8, 2018 in New York. (Bryan R. Smith/AFP/Getty Images)

Lawmakers in the United States have been pushing the Trump administration to crack down on Russia, and now they’re setting their sights on multinational banks to tighten the noose around Russian President Vladimir Putin’s vast financial empire.

Democratic Sens. Jeanne Shaheen and Sheldon Whitehouse sent a letter to the CEOs of eight major banks — three from the United States and five from Europe — requesting details on the accounts and assets of Putin’s top allies, following the Treasury Department’s publication of a Russian “oligarch list” that coincided with new sanctions.

The letter, the first of what could be an opening salvo on banks amid Washington’s scurry to harden institutions against Russian influence, is designed to shine a light on potentially dirty Russian money in Western financial institutions.

“A lot of this money then goes on to either bolster Putin or to even finance some of the illicit activities that go to the heart of Congress’s worries over the Kremlin, whether it be election interference or disinformation,” a Democratic Senate aide tells Foreign Policy.

“This is a very, very big problem, and quite frankly the only ones who can get close to illustrating the scope of the oligarchs’ reach in our financial system are the banks. We need them to help us with this,” the aide adds.

The move also comes amid a highly charged political investigation into whether U.S. President Donald Trump or his team colluded with Russia as part of his 2016 presidential campaign. Several Republican senators who have been traditionally hawkish on Russia did not immediately respond to request for comment about the letter.

Lawmakers supporting the measure may face an uphill battle, however. Banks are under no legal obligation to respond to the letter, and, especially given the scope of the oligarch list, the request could prove a regulatory and political minefield for banks required to protect client information.

“There is no due process behind this,” says one former U.S. Treasury official, who asked not to be named. The letter “undermines the strict regulatory environment for banks and sets up a scenario in which banks don’t know what to do with this,” the former official says.

Sounds like the authors are both calling for expansion of the recent [specially designated nationals] sanctions to any oligarch on the January 29 list, and at the same time suggesting that US banks should presume any oligarch is off limits already and cut their ties,” Matthew Rojansky, director of the Kennan Institute at the Wilson Center, writes to FP.

But other experts say increasing political pressure and scrutiny of who harbors the vast web of Russian oligarch money is a welcome step. “The banks have to be leery of even the impression they help finance or push Russian funds into safe harbor,” says Brett Bruen, a former Obama White House and State Department official who tracked Russian election meddling.

The Treasury Department’s oligarch list is required under congressional legislation that was signed into law by Trump last summer. Though the oligarch list was not necessarily meant to lead to sanctions, a classified version is thought to be the basis for the sanctions on Russian individuals and entities put in effect by the Treasury Department earlier this month.

The unclassified version, however, was cribbed from a Forbes list of wealthy Russians and the Kremlin website. Nevertheless, Shaheen and Whitehouse are using the unclassified list as the basis for their request to banks.

“We feel that the January 2018 report [“Oligarchs List”], and not just sanctions designations alone, should guide banks and help to detect and deter the exploitation of our financial system by Russian oligarchs and senior political figures,” Shaheen and Whitehouse wrote in a statement released Wednesday.

Alina Polyakova, a fellow at the Brookings Institution’s foreign-policy center, welcomed the move. “I think it’s about time that congressional members started to turn up the heat on our financial institutions to do more to address the bigger problem of Russia’s export of kleptocracy,” she says.

And while Polyakova thinks the unclassified list was too broad to be the basis of sanctions, she sees its sweeping scope as advantageous, because Congress can now ask these banks to assess everyone on it.

“There’s some usefulness in having very broad list,” she says. “It gives congressional members more maneuvering.”

Whether the banks reply with the information the senators are after is still to be seen, but it may not even matter.

Much of Russian money is kept in real estate, not in U.S. banks, which is in “Congress’s court rather than in the bank’s court,” Peter Harrell, who formerly worked on sanctions at the State Department and is now an adjunct senior fellow at the Center for a New American Security, writes in an email to FP.

U.S. banks require some information and identifying information for those who open accounts. Real estate purchases, however, require much less. “Consequently, it has become much, much easier for Russian oligarchs to buy real estate in the US than to keep their money in the US financial system,” Harrell adds.

“When is Congress going to take this issue up?”

Robbie Gramer is a diplomacy and national security reporter at Foreign Policy. Twitter: @RobbieGramer

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