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Baby on Board! How Kleptocrats and Associates Use Family Members to Evade Sanctions

September 23, 2023by Anrike Visser

First published by Just Security

“When Yevgeny Prigozhin’s plane crashed on Aug. 23, he was not only the founder of the private Russian military company Wagner Group but also the head of a business empire that funded the group’s activities. Subject to sanctions by the United States, United Kingdom, European Union, and more, however, he would have found conducting business in his own name to be a challenge. That may have been the kickstarter for what Western governments believe to be a family affair.

At the time of his apparent death in the crash, Prigozhin’s wife, mother, and two of his children were under sanctions for their links to his businesses. Prigozhin’s mother, Violetta Prigozhina, took the EU to court and won a judgment in March finding that she was not a current owner of the companies linked to her son at the time of sanctioning and that family relationships alone were not enough to justify including her on the sanctions list. However, five days later, the EU imposed sanctions again, contending that even though she doesn’t own companies associated with Prigozhin anymore, she likely benefited from her links to the business, thereby justifying her inclusion.

But there is one Prigozhin family member who has not been sanctioned so far: his youngest daughter, Veronika Prigozhina, who was a minor at the time other family members were designated. She was made owner of one of the family’s assets, a hotel in St. Petersburg, Russia, the Financial Times reported. It’s a common tactic used by kleptocrats and corrupt officials to control assets without being tied directly to them. In many countries, it is possible for young children — even babies — to be corporate shareholders, and it is rare for minors to be sanctioned for their parents’ actions, creating a neat little workaround. Prigozhin’s practices highlight the importance of monitoring family members in combating corruption and sanctions evasion.” […]

The use of minors to hide assets of sanctioned parents is a well-known tactic.

Read the full op-ed at Just Security.

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