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Magnitsky legislation

Published Friday, July 27, 2018

Stronger legislation providing for sanctions against corrupt officials who commit gross human rights abuse has been passed...

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Sergei Magnitsky was a Russian lawyer who uncovered large-scale tax fraud. While working for Hermitage Capital, a firm based in London and run by the US-born financier Bill Browder, he discovered that millions of dollars of Hermitage tax payments had been syphoned off into the pockets of Russian officials. He was arrested but refused to withdraw his testimony and died in 2009, after mistreatment in jail.

Bill Browder, now a UK citizen, started a campaign to have sanctions imposed on the officials involved – to get the officials banned from visiting the US and using the US financial system.

A Magnitsky Act that named the Russians involved was passed by the US Congress in 2012. It was later broadened to become in 2016 the Global Magnitsky Act, applying to gross human rights abusers anywhere. Other countries including Canada, Lithuania and Estonia have introduced their own versions of the legislation.

There has been increasing pressure for the UK to follow suit. Various pieces of legislation have come before Parliament, in the form of Private Members’ Bills and amendments to Government Bills, although “Magnitsky” does not appear in their official titles and they do not refer to Russia.

Arguments used against introducing Bills or changing existing law to provide Magnitsky legislation have included questions about the definition of ‘gross human rights abuse’ and the suggestion that powers to sanction gross human rights abusers are already there in existing legislation.

Two major pieces of legislation to have ‘Magnitsky’ elements added to them: the Proceeds of Crime Act 2002 and the Sanctions and Anti-Money Laundering Bill (now the Sanctions and anti-Money Laundering Act 2018).

The Criminal Finances Act 2017 amended the Proceeds of Crime Act 2002 to expand the definition of ‘unlawful conduct’ to include gross human rights abuse or violation. After Opposition and Government amendments, the Sanctions and anti-Money Laundering Act 2018 includes gross human rights violation as a reason for imposing sanctions on a person or an entity.

Persons or entities who are subject to financial sanctions are named on public lists – if they were not, finance companies would not know who to apply the sanctions to. People who are the subject of visa bans are not routinely named, however, as the Government does not believe that that would be in the public interest.

There are some who question the effectiveness of Magnitsky legislation: there are countless powerful officials who commit gross human rights abuses; choosing who to impose sanctions upon is likely to be a subjective business. Inconsistencies in application would make designations even more likely to be litigated.

The recent legislative changes to the Proceeds of Crime Act and the Sanctions and Anti-Money Laundering Bill have been broadly welcomed, however, and the Sanctions Act also includes stronger provisions against money laundering since amendment in Parliament.

Commons Briefing papers CBP-8374

Authors: Ben Smith; Joanna Dawson

Topics: Criminal law, Human rights

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