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The wealth subject of Russia sanctions over Ukraine can prove elusive


Sanctions imposed by Canada and other Western nations will freeze the assets of wealthy Russians abroad, if officials can find it

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B.C. likely isn’t a location where Russian billionaires have socked away large amounts of wealth that will be the subject of sanctions over the unprovoked invasion of Ukraine, but it would be difficult to know, according to an expert.

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“The Russian community is less prominent than some other diasporas in Vancouver and B.C.,” said Adam Ross, a corporate investigator and partner in the firm Templeton Research, “but I think the really important thing is that we can’t tell.”

Canada has joined the U.S. and a growing list of European countries to impose economic sanctions aimed at punishing Russia and a long list of so-called oligarchs by isolating them from the global financial system.

On Friday, Prime Minister Justin Trudeau expanded sanctions that have been in place since 2014 at the start of Russian-backed incursions into eastern Ukraine to bar Canadians from doing business, dealing in real estate with or providing financial services for individuals on the list. Trade with Russia is also banned including, as of Monday, the import of Russian oil.

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The difficulty, however, is that the richer the oligarchs are, the more likely they have already moved their wealth outside of Russia’s major banks that are within the net of sanctions, Ross said.

“We don’t know, because there isn’t the infrastructure in place to identify actual owners of assets in Canada.”

B.C.’s landowner transparency registry, which requires entities that own property for the benefit of corporations or trusts to register the beneficial ownership of those entities, had a Nov. 30 deadline to do so. Ross said that was a good start, but oligarchs could likely sidestep the rule by using nominees — trusted friends or associates who agree to put their names on property titles on their behalf.

“It’s pretty easy for the government to identify properties held through a corporate (interest), but if you have a close friend or associate hold it for you, it’s much harder for a third party to identify that person’s nominee,” Ross said.

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Officials from Finance Minister Selina Robinson’s office didn’t respond to Postmedia News’s questions about Russian ownership of B.C. real estate.

Tracking down beneficial ownership of assets held by sanctioned individuals will also be the job of FINTRAC, Canada’s Financial Transactions and Reports Analysis Centre, said Peter German, a financial crimes expert, chairman of the Vancouver Anti Corruption Institute’s advisory committee and former RCMP deputy commissioner.

“If assets are located here and an individual (owner) is sanctioned, then a financial institution cannot deal with that individual,” German said.

When Canada imposes sanctions on countries, government turns the lists of those who are sanctioned to FINTRAC and the Office of the Superintendent of Financial Institutions, which in turn passes it on to the compliance departments of Canadian banks and financial institutions. The sanctions will have an effect on ordinary Russians who need to do business through their accounts in Russian banks that are now off-limits to most foreign financial institutions.

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“The impacts are going to be felt by the Russian economy as a whole, and certainly everyday people who have less influence over Russian government policy than the elites do,” Ross said.

However, Ross added that anyone who is in a position of influence over the Russian government likely had already moved their wealth overseas. And typically, the richer someone is, the harder it is to track down that wealth, which is usually concealed.

Setting up corporations in jurisdictions where companies don’t have to disclose shareholders is one method. That legal entity can open bank accounts to deal with the international financial system without putting an individual name to the money, Ross said.

“The missing piece of the puzzle there is being able to go after assets held by elites overseas,” Ross said.

depenner@postmedia.com

twitter.com/derrickpenner

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