Biden administration advances Magnitsky sanctions program

The Biden administration has continued to expand the United States (US) Magnitsky sanctions program, targeting human rights abuses and corruption in Russia, Eritrea, and Paraguay. These latest announcements from the Treasury’s Office of Foreign Assets Control (OFAC) reflect a growing desire to use economic statecraft to tackle a variety of global challenges.

The diversity of the events that triggered these sanctions also highlights the broad lens through which the administration is interpreting the Global Magnitsky Act. This wave of sanctions targeted:

• Chemical weapons capabilities in Russia. On the one-year anniversary of opposition leader Alexei Navalny’s poisoning by Russian government agents, the US and United Kingdom (UK) designated nine Russian individuals who were involved in the attack. Two scientific laboratories operated by Russia’s Defense Ministry have also been sanctioned. In its statement, OFAC was quick to highlight that Magnitsky-style sanctions were imposed in alignment with the “spirit” of the US Chemical and Biological Control and Warfare Elimination Act of 1991.

• Human rights abuses during a conflict in Eritrea. OFAC sanctioned General Filipos Woldeyohannes, the Chief of Staff of the Eritrean Defense Forces. He’s accused of leading a military force that is responsible for massacres, looting, and sexual assaults in neighboring Ethiopia. The sanctions against Filipos were attributed directly to Executive Order (E.O.) 13818 which was issued by the Trump administration to build on the original Global Magnitsky Act. 
• Illicit finance and corruption risks in Paraguay. Three Paraguayan individuals and five entities were also sanctioned by OFAC on the grounds of corruption. The action was taken due to concern about illicit finance in the Tri-Border Area (TBA) at the convergence of Argentina, Brazil, and Paraguay. Historically, the TBA has been a prominent location for terrorist and criminal activities. The individuals targeted were described by OFAC as either despachantes, or associates. Despachantes – dispatchers – are defined as “individuals skilled at navigating local and federal bureaucracies by using their expansive networks of government officials to aid them in their activities.” All were sanctioned under E.O. 13818. 

As the US draws down its overseas military presence in areas like Afghanistan, it’s likely that economic measures, including sanctions, will form an even more critical part of US foreign policy. For firms, that means maintaining a comprehensive sanctions screening program built around up-to-date lists has never been more critical. In its statement OFAC highlighted that as a result of these sanctions:

• All property and interests in property of those sanctioned are blocked and must be reported to OFAC.
• Any dealings by US persons or dealings with the US involving property of interests of sanctioned persons are prohibited.
• Any entities owned, directly or indirectly, 50 percent or more by a sanctioned individual are also blocked.

The use of sanctions as a diplomatic tool is growing in popularity around the world, too. In addition to collaboration with the UK on actions taken against Russia, more countries are rolling out their own Magnitsky-style programs. Earlier in August Australia’s federal government became the latest to announce an expansion of its sanctions laws to target human rights violations and corruption.

To help compliance teams stay informed on the latest developments in sanctions programs around the world, we’ve created this guide: The Evolving Use of Sanctions.