Russian oligarchs face $95 billion black hole thanks to sanctions

05 January 2023

A $95 billion “black hole” in oligarch wealth shows strict sanctions on Russia are working, a leading anti-money laundering (AML) expert has argued.

New data from Bloomberg has revealed Russia’s wealthiest oligarchs have lost more than $300 million per day since the country’s invasion of Ukraine. The UK Government took swift action to implement heavy sanctions on the Kremlin, helping to freeze more than £18 billion of assets held by oligarchs and Russian nationals.

The UK was joined by countries across the world in efforts to defund Putin’s war machine. New data from across the Atlantic suggests the United States and its allies have immobilised around $300 billion worth of Russian Central Bank assets.

One of the biggest losers was Roman Abramovich, the former owner of Premier League football team Chelsea. In 2022 alone, his personal wealth fell by 57 percent to $7.8 billion.

Martin Cheek, managing director of digital compliance solution provider SmartSearch, and a qualified lawyer, has argued that the sizeable shortfall in personal wealth shows the success of sanctions, but warned regulated firms cannot become complacent.

Martin commented: “This latest data clearly demonstrates the black hole Russian billionaires are now facing and the successful efforts made by governments across the world to put meaningful sanctions in place. As Russia’s brutal invasion enters a pivotal winter, this good work must continue to limit available funds and bring this war to a much-needed conclusion.

“This positive news is by no means a reason for complacency though, especially for regulated firms who act as the “gatekeepers” of the UK financial system. Tools such as electronic verification (EV) and robust sanction screening remain vital to properly disrupt the rat runs used by designated persons (DPs) to evade financial restrictions.

“Detailed Know Your Customer (KYC) checks and real-time monitoring have taken further importance in the current climate and should be integral parts of any digital compliance process. If the threats of hefty fines, time-consuming investigations and even criminal prosecution wasn’t enough to encourage compliance, the thought of given a green light to Russians should certainly be.”

SmartSearch’s digital compliance solution supports more than 5,500 clients and 50,000 users across the world, helping them deploy hundreds of detailed checks in seconds through a single platform. It can help identify those subject to sanctions, as well as Politically Exposed Persons (PEPs), Special Interest Persons (SIP) and Relatives & Close Associates (RCA).

The platform is trusted by one in three of the UK’s top 200 law firms, 30 per cent of top 100 accountancy firms and more than 1,000 property firms.