This is how Russian oligarchs are being punished for the Ukraine war

Vladimir Putin, Roman Abramovich (archive image)

With the new law, the federal government wants to hit oligarchs from the environment of the Russian President in particular

(Photo: Imago Images)

Berlin The federal government wants to increase the pressure on Russia. To this end, the Federal Ministries of Finance and Economics launched a second “Sanctions Enforcement Act” on Friday. It should help to better enforce the sanctions agreed at European level. This emerges from a paper by the two ministries on Friday. The law is expected to take effect later this year.

With the new regulations, the government wants to hit the oligarchs associated with President Vladimir Putin in particular in order to put pressure on the Russian ruler. The sanctions focus on freezing assets. However, the responsible authorities often have a hard time with this because the oligarchs conceal their possessions.

This is particularly problematic when people buy houses, apartments or land. The Ifo Institute estimates that there are 15,000 to 20,000 cases of concealed property ownership in Germany. This is where the federal government wants to start.

Transparency register is expanded

In a study published this month, scientists at the Ifo Institute examined five federal states. In 1,000 cases, which is about five percent of all real estate investment processes examined, the trail leads to a so-called shadow financial center. These are countries like Switzerland or certain Caribbean islands with non-transparent financial markets that allow the investment to be concealed.

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The new law aims to remedy the situation in this area in particular. The finance and economy ministries are planning a ban on real estate purchases with cash, gold or cryptocurrencies. “The regulation serves to prevent money laundering by avoiding anonymous transactions,” says the ministry paper. According to the government representatives’ plan, notaries will monitor the cash payment ban.

>> Read more: Russian oligarchs can buy their way out of sanctions with their billions

The transparency register should also create more clarity about real estate that may be owned by oligarchs. This was introduced in Germany in 2017. It lists the backers of companies and other corporate structures and is intended to prevent money laundering and terrorist financing.

It is now planned to also make owners and plots of real estate in it accessible. This should make the work of the authorities easier, because research into the background of real estate owners has so far been complicated.

A central office for the enforcement of sanctions is to be set up

There are around 400 land registers in Germany. “Name changes, mergers and other corporate changes [können daher] are regularly not traced in the land registers,” write the ministries.

In addition to the subject of real estate, the law also deals with the general coordination of sanctions. The ministries plan to create a central agency for sanctions enforcement at the federal level. This will coordinate all “responsible authorities in Germany internally and externally,” the paper says.

Initially, it is planned to affiliate the central office with customs. It is later to be merged into the new federal agency to combat financial crime planned by Federal Finance Minister Christian Lindner (FDP).

In May, the federal cabinet passed the first sanctions enforcement law. This included short-term measures, including a duty to report for sanctioned persons. Accordingly, oligarchs must disclose their assets such as real estate or luxury yachts to the German authorities.

In the case of real estate in particular, this has so far only been of limited use due to the possibilities of concealment, which are now to be tackled.

More: Federal government wants to force oligarchs to disclose assets

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