Center for Strategic Assessment and forecasts

Autonomous non-profit organization

Home / Defence and security / / Articles
Offshore: the potential risks
Material posted: Publication date: 06-05-2018

Offshore from the time of their appearance was considered a safe haven for the assets of the wealthy, as, in fact, a time bomb. If any country gets control of the majority of "financial havens", it has the ability at its discretion to dispose of these assets, up to the confiscation. To date, this country became the United States of America. However, taking money and property in the offshore is not an end in itself for Washington, and represents the deferred element of the system pressure on the establishment of any country and, primarily, the Russian Federation. Core measures comprehensive sanctions impact on the elite as a whole through its individual members is the "Magnitsky act", a Supplement to S. 284 – "Act on global accountability in the field of human rights", as well as a comprehensive "Act on countering the opponents of America through sanctions." These documents give Washington a number of instruments of influence on wealthy people closest to power, creating a threat to the stability of the political landscape and developing economies, including Russia.

"Because our banks hold $ 500 billion owned by Russia's so-called elite, you must first understand whose elite it is!"[1]. This phrase, spoken by Zbigniew Brzezinski in the early 2000-ies, characterizes the attitude of the American establishment, not only to the Russian elite as to foreign and domestic policy, conducted by the Russian authorities. Today the situation has changed only in the fact that in offshore accounts is already more than $ 1 trillion. dollars, while that belonging to Russian citizens (apparently, even this figure is too low) (see Fig. 1[2])


Fig. 1

The volume of offshore capital the Russians according to the latest estimates of the National Bureau of economic research the United States exceeds approximately three times the level of foreign exchange reserves. In 2015, the volume of assets placed in offshore companies, made up about 75% of the national income of the country. That is, abroad – in the UK, Switzerland, Cyprus and other offshore centers – contains as much Finance wealthy Russians, as the entire population of Russia keeps within their own country[3].

In this light it becomes clear that hope for the arrival of foreign capital in the Russian economy have little basis. Most investors make their decisions based on several rankings and ratings of the leading banks, agencies and investment advisors. They all can negatively affect image of Russia. The point is not even that these estimates may be biased (as many are aware), they are kind of a recommendation to invest or not money in the economy. Speaking about the improvement of the investment climate in Russia in General, need to think about who's today represents Russia in this interaction. As far as reasonable for our partners can be a call to invest in the domestic economy from the Russian businessmen prefer to keep their money abroad.

It should be noted that the taxation system in the Russian Federation is quite soft compared to developed countries. So at current we have in the country a flat scale of taxation the basic rate of tax on income of physical persons (personal income tax) equal to 13% of any income received by individuals who are tax residents of Russia. And in France, the UK, USA and even China, which adopted a progressive scale, the rate for wealthy individuals ranges from 30% to 60%.

In the beginning of October 2017 lower house of the Russian Parliament has rejected 4 of the bill on the introduction of a progressive scale. That is, the tax regime as a whole remains quite favorable. Attempts at adopting similar laws were made LDPR and "Fair Russia" in 2012, 2013, 2014 and 2015. By the way, in the lists of the Forbes 200 billionaires last year increased their revenues by $ 100 billion, the overall state of our billionaires already equal to the gold reserves of 460 billion dollars[4]. "Today 10% of the richest Russian citizens in 16 times richer than the poorest. This gap exceeds the maximum permissible values recommended by the UN. If to take into account hidden income, shadow business, corruption and the gap can reach 40 times", – stated in the explanatory Memorandum to one of the bills[5].

In principle, the increase in the personal income tax applies to a relatively small group of citizens. According to mid-2017, the income of 3-10 million rubles showed 448,8 thousand people and more than 10 million rubles – a total of 35.4 thousand Russians. Of them revenues in excess of 1 billion rubles a year, were at 424. According to calculations of the authors of the latest draft law on reducing the rate of personal income tax for the poorest budgets in the regions where this tax is credited, you will lose all 71,68 billion. For citizens with average incomes, nothing will change. A group of citizens with high incomes (3-10 million) will pay only 78,54 billion more than the current rate. But the rich will have to pay. In total, they can be further obtained of 1.23 trillion. rubles[6]. In the end, the Russian Government gave a negative conclusion on the bill.

That is, Russia is in a difficult situation: tax revenues by increasing personal income tax rate no, the trend in the withdrawal of the large capital from the country for a long time continues. It threatens serious consequences. It's not just about the derivation of a large money supply, but more serious the threat of non-repayment of these funds in the Russian Federation in principle, even at the request of the owners of capital.

In this context it is worth remembering such a resonance document as the "Magnitsky act", or the Magnitsky Act, 2012 and its peculiar complement of S. 284 the Global Magnitsky Human Rights Accountability Act, or bill number S. 284 – "Act on global accountability in the field of human rights"[7]. This document was adopted in 2016. According to the text of S. 284, the main aim of adoption is to extend the "Magnitsky act" in all countries of the world. From the point of view of adequate legal practice laws passed in one state not valid in another, but not in this case. Countries prefer to comply with the requirements of us law, if necessary. In other words, the zone of interests of the States – the whole world, and American law can apply to a single country.

Act global accountability contains a number of different provisions. Are the key provisions of the law that gives the President the right to use some session instruments, namely:

  1. confiscation (freezing) and the ban of transactions with property, assets, in case their presence on the territory of the United States, or being under the control of a person or organization resident in the United States. Also, this rule can be implemented in countries where the US have influence;
  2. lock and ban transactions with financial assets;
  3. the deprivation of a visa and a ban of entry into the United States.

In accordance with section 284 of the act S. the President may terminate the application of sanctions against a person if the termination of sanctions is appropriate, relates to the vital interests or affects national security of the United States of America.

In addition, the bill provides the head of state the right to update the list of foreigners who are subject to sanctions. The grounds for sanctions are "allegations of corruption, carrying out executions without trial, torture and other violations against human rights defenders and those who expose illegal activities." Sanctions imposed by Act global accountability, are not time limited and can only be cancelled by decision of President of the United States[8] in the case of expediency of such decision.

Developers of the law have become members of the U.S. Senate Committee on foreign Affairs, Democrat Benjamin Cardin and Republican John McCain. According to Cardin "a visit to the US and access to our financial system, including U.S. dollars, are privileges that should not apply to those who violate basic human rights and the rule of law"[9], apparently American.

The adoption of this bill added to the Toolkit Washington new the way point and mass pressure. The law was supported by Human Rights Watch and other human rights defenders. This law is not the only one of its kind in the world. The legislation, named "in honor of Magnitsky" has already been taken, as in Canada, or under discussion, as in the European Union and Norway.

Next to create a more complete picture should reveal the key provisions of the "Magnitsky Act". According to section 4, paragraph (a), the Secretary of State, in consultation with the Minister of Finance, publishes in the Federal register a list of all the people whom the Secretary of State deems responsible for the death of Sergei Magnitsky. In fact, the responsibility of the Secretary of state now is to expose "illegal activities of officials of the government of the Russian Federation"; as well as the protection and promotion of internationally recognized human rights and freedoms, the right to democratic elections. This list should be updated. Under subparagraph (2) of paragraph (d) of the Magnitsky list may be classified "in the interests of national security of the United States." Under subparagraph (3) of paragraph (d) deleting from the list, the Secretary of state must provide "evidence on which to base a decision to exclude from the list". Moreover, it is possible to implement in a "classified form", if the Secretary believes it is "necessary to the national security interests of the United States." You should pay special attention to the fact that the state Department does not hide that the law is NOT acting in the interests of Russia, and "in the interests of national security of the United States." The phrase in this context appears in the document more than once, and means that it is focused on purely American interests[10].

The Secretary of state and the Minister of Finance once a year report to the relevant congressional committees a report on the number of persons added to or removed from the list, etc. If a list was added a little individuals, the report must contain an explanation of why it happened. Thus, the sanctions list should be periodically updated. The report also should disclose the measures taken by the Executive, for adoption in other countries the same anti-Russian sanctions. The provisions of the "Magnitsky act" is valid for 10 years[11].

But that's not all. 2 August 2017 D. trump signed a new law H. R. 3364 - Countering America's Adversaries Through Sanctions Act (CAATSA) or "Act on countering the opponents of America through sanctions" No. 115-44, dated August 2, 2017. The act affects a wide range of issues. Although the provisions relating to Russia, are in the middle of the act, it is clear that its action is directed against Moscow and its policies of the last five years. In the 184-page document Iran allotted 25 pages, of the Russian Federation – 98, financing of terrorism, 16, North Korea – 40[12]. It should highlight some of the provisions that relate to Russia and its citizens.

In section 241 of the new Act States that the Secretary of the Treasury in collaboration with the Director of National intelligence and the Secretary of State submit to the appropriate congressional committees a detailed report (and list) of "senior foreign political figures and oligarchs in the Russian Federation, on the basis of their proximity to the Russian leadership, and the net value of their assets (equity capital)". The law requires the us authorities to identify known sources of income of the specified persons and members of their families (including spouses, children, parents and siblings) including assets, investments, other business interests and relevant information on the beneficial ownership. Also the document obliges us intelligence agencies to assess the relationship between these entities and President Vladimir Putin or other members of the ruling elite of Russia, and find out how involved these individuals in corruption. American analysts should assess the potential impact of the introduction of secondary sanctions against Russian oligarchs, Russian state companies and the Russian parastatal entities, including effects on the subjects and on the economy of the Russian Federation, as well as on the economy of the United States and allies of the United States[13].

In section 243 of the Act CAATSA listed and explained the ways and methods additional search of any assets of Russian businessmen and their families. In other words, the last law requires the us financial intelligence to collect all information about assets particularly close to the President of Russia of people on the eve of elections. The power elite and the most wealthy Russians in the end can be put in an awkward position.

Getting into this list, the so-called "Kremlin report" doesn't mean against the defendants sanctions will be imposed automatically, but there is a risk that they will be included in the SDN – Specially Designated Nationals List or the list of special categories of citizens. This means that the people against whom the sanctions will no longer be able to have Bank accounts in dollars or an account in another currency, if the transaction of the Bank that holds their savings, go through the United States. They lose access to everything associated with the us financial system. Although European banks are not directly involved in the system, but may find that the interaction with the persons involved in the list associated with high risks. The reality is that when applied to SDN, the defendant loses access to services the majority of Western banks[14].

The meaning of the described events recorded in paragraph 252 of Countering America's Adversaries Through Sanctions Act. From this it follows that acting with this law the Russian government, the Americans want to achieve:

  • the withdrawal of Russian troops from the territories of Georgia, Ukraine and Moldova;
  • to return control over the borders of these territories to their respective governments;
  • the cessation of attempts to undermine the legitimate governments of these countries.

In accordance with the provisions of section 252 of the U.S. Congress considers it necessary:

  1. countries of Europe and Eurasia to redouble efforts to strengthen the sustainability of their institutions, political systems and civil societies;
  2. The U.S. and European Union to continue the work to counter aggression by the government of the Russian Federation; to continue to coordinate assistance programs, and other efforts to fight against Russia;
  3. members of the North Atlantic Treaty Organization to strengthen cooperation among themselves, as NATO is the main force maintaining peace and security in Europe and Eurasia;
  4. the countries of the Alliance to find out whether their financial systems to hide illegal financial activities of officials of the Russian Government or individuals close to the President Vladimir Putin, who had been enriched by corruption;
  5. the President of the United States to use his powers for imposing sanctions, according to "The Sergei Magnitsky Rule of Law Accountability Act of 2012" and "The Global Magnitsky Human Rights Accountability Act"[15].

Not later than April 1 of each year the Secretary of State, submits to the appropriate congressional committees a report on programs and activities implemented to achieve the purposes described in the act during the previous financial year.

Taking acts such as the three described above, the United States continues a policy known as "Limanskaya doctrine" which "does not recognize territorial changes made by force" or "state created as a result of aggression", such as the illegal "invasion" and "occupation" of Abkhazia, South Ossetia, Crimea, Eastern Ukraine and Transnistria.

Thus, the USA with the help of the measures described above have the potential to provide powerful financial and political impact on anyone. There is reason to say that many countries, including Russia, have given the Americans a serious card in hand. Possible financial and other sanctions is part of the overall policy of Washington. And the President of the United States law H. R. 3364 now will not, without the consent of Congress to repeal or at least weaken the sanctions. Their abolition is possible only if more than half of the senators and congressmen agree with that. To expect such a turn in the foreseeable future is not necessary. Currently, American legislators as a United front in favor of sanctions.

In addition, CAATSA (article 243) is mentioned and another report entitled "About the illegal funding associated with the Russian Federation". It, according to the law, the Minister of Finance shall submit to the Congress within a year — not later than 2 August 2018. Under the definition of "illegal financing" in this case should be implied by sponsoring terrorism, drug trafficking, money laundering, "or other forms of illegal funding at the discretion of the President"[16].

Fears can also be caused by the fact of storing more than 100 billion in government dollars in US Treasuries. In 2013, Congress have cautiously raised the topic of freezing of Russian state finances. And trump signed the Act of Countering America's Adversaries Through Sanctions Act can be grounds for this. Moreover, the term "аdversaries" can have value as "opponent" and "enemy."

In 2011, the U.S. has frozen the assets of Libyan government totaling $ 30 billion in just 2 days. And when February 28, 2011 was definitely aware of this, Gaddafi suddenly announced that President Barack Obama "a good man, but his dezinformiruet". Its economic sanctions against Libya imposed by the European Union. Parallel to preparing contingency plans for various "emergencies" and made the regrouping of the American forces in the Mediterranean region.

Another good example is the decision of the financial authorities of the United States to freeze the funds of the national sovereign Fund of Kazakhstan. We are talking about assets worth $ 22 billion. In total frozen amount is 17% of Kazakhstan's GDP. The money frozen at the suit of the company Moldovan businessman filed against the government of Kazakhstan. In fact, we are talking about precedent, namely, to change the status quo that has developed over the decades. The fact that almost half of the sovereign wealth Fund of the independent state can be frozen in accounts in an American Bank only one court decision that calls into question the reliability not only of private but also of public money in the USA[17].

It should be noted that the potential freezing of Russian assets is unlikely to affect investments in securities of the U.S. Treasury, as the American authorities run the risk to saw a bough on which sit. However, given the current tensions, we should not rule that one out. In any case, the first under likely attack falls private deposits and capital. The system of external pressure also fits one of the laws of "sanctions" package, according to which the American Ministry of Finance reserves the exclusive right to demand from its investors to return all funds invested in the Russian Federal loan bonds (OFZ).

The result is the following: the law in question is an integrated system for the delayed impact of the establishment of any country, as the decision to freeze or withdrawal of money can be made in the most unexpected moment. In the sanctions list can be citizen of any country (addition to the "Magnitsky Act only cemented this rule on paper). "Kremlin report" according to the available information consists of the largest Russian owners. Blow is a blow to fragile after the crisis of the Russian economy. After that, the logic should be adopted new restrictive measures against persons involved in the list. If a person is willing to cooperate with Washington, it may be removed from the list secret. The list itself and all the evidence may not be disclosed if it meets the national interests of the United States. In other words, any person is encouraged to cooperate with the American authorities by the laws and the freezing of assets is not the purpose of the adopted acts.

Naturally, they are in conflict with internationally recognized rights and freedoms of man and laws countries. But who is going to look when most of the world financial management tools are under the control of the United States. They as a result create an international system for the exchange of tax information (Multilateral Competent Authority Agreement – MCAA) have become one of the largest offshore and supervise the most part of called exotic offshore, including former British. That is Washington has the ability to as a huge influx of money, and almost any information, spot and quietly affecting many influential politicians and businessmen.


[1] J. Helmer Vladimir Yakunin, Russian Railways supremo, on errors in russian company share and bond prospectuses. 29/06/2011. URL:

[2] Desjardins J. The World's "Hot" Money. 11/11/2015. URL:

[3] Novokmet F., T. Piketty, G. Zucman, FROM SOVIETS TO the OLIGARCHS: INEQUALITY AND PROPERTY IN RUSSIA, 1905-2016. 07/2017. P. 5, 18, 21. URL:

[4] the state Duma rejected the bill on a progressive scale of personal income tax. 12/10/2017. URL:

[5] the state Duma rejected a number of bills on introduction of a progressive scale of personal income tax. 12/10/2017. URL:

[6] Orekhin P., Komarov A. a tax on the rich: last reserve of the Kremlin. 07/07/2017. URL:

[7] Adopted unanimously by the U.S. Senate February 1, 2016

[8] B. L. Cardin, S. 284 The Global Magnitsky Human Rights Accountability Act. Section 3, Paragraph (g). URL:

[9] Cardin, McCain Introduce Global Human Rights Accountability Act. URL:

[10] H. R. 4405 (IH) - Sergei Magnitsky Rule of Law Accountability Act of 2012. P. 10-12. URL:

[11] S. 284 The Global Magnitsky Human Rights Accountability Act. URL: (

[12] Sanctions forever. 26/07/2017. URL:

[13] there are a number of civil non-commercial organizations, among which stands out "the Center for the study of corruption and organized crime" (OCCRP), which collect and output the media information about the income and condition the most approximate to the Russian government people.

[14] A. Polunin America will destroy the "bad guys" of Putin. 25/11/2017. URL:

[15] H. R. 3364 - Countering America's Adversaries Through Sanctions Act. URL:

[16] Sanctions against Russia: how it will be. 31/01/2018. URL:

[17] United States encroached on the stored foreign reserves. 25/11/2017. URL:

RELATED MATERIALS: Defence and security