The future of Magnitsky laws

The Russia and Moldova Jackson–Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012, superseded by the Global Magnitsky Human Rights Accountability Act 2016 (USA) (the Global Magnitsky Act),  was named after Ukrainian-born Russian lawyer Sergei Magnitsky, who was beaten to death in a Moscow prison in 2009 following his revelations of serious tax fraud ($US230 million) by Russian companies, involving Russian tax officials.

The US laws were introduced in a large part because of Magnitsky’s friend Bill Browder, a US-born businessman who worked in Russia, and created one of the world’s largest investment funds in Russia in the late 1990s. Browder lobbied then US senators Benjamin Cardin and John McCain, who proposed the legislation. It was passed by US Congress in December 2012, with the intention of punishing Russian officials (including tax officials, judges, government-appointed investigators) who appeared to be responsible for Magnitsky’s death through an entry ban to the US, and access to the US banking system. An extensive list of foreign individuals were also sanctioned including the Commissioner of Hong Kong Police Force, Saudi Arabian officials alleged to be involved in Jamal Khashoggi’s murder, Head of the Nicaraguan police, and the former president of Paraguay, Horacio Cartes.

Russia responded with sanctions upon US officials, barring entry to Russia, and also banning US citizens from adopting Russian children.

In March 2018, just over a year into US President Donald Trump’s first term, Russian lawyer Natalia Veselnitskaya was employed to seek a winding back of the Magnitsky Act – if not its complete repeal. She met with Donald Trump Jr., though details of that meeting are not known.

Australian expert teamed with international organisation to conduct world-first study in to Magnitsky sanctions

Beginning in mid-2023, Anton Moiseienko led the first comprehensive empirical study into the effectiveness of sanctions upon individuals accused of corruption. He investigated 20 individuals sanctioned under the Global Magnitsky Act, and with the support of the ANU and the International Lawyers Project, Moiseienko interviewed nearly 30 experts and collected data from open source research from Israel, Russia, Iraq, and elsewhere.

He tells LSJ, “There is this longstanding discussion as to whether sanctions work and what it means for sanctions to work, which is very important because sanctions regimes require significant efforts to set them up and implement them. But the challenge is that it can get very theoretical when people start talking about what effectiveness might even mean, and what the objectives of sanctions are, and what they are meant to achieve. Is it necessary for them to actually change the behaviour of the target? Is this enough to disrupt it?”

Instead, Moiseienko says, “What we wanted to do with this piece of research, conducted by myself together with the International Lawyers Project, is to provide a different angle to that discussion and look at what sanctions have achieved, and how they have affected individuals targeted.”

The results found one-third of individuals experienced no significant impact from some of their assets being frozen, but most of the sanctioned individuals did suffer impacts from governments and private sectors collaborating to prevent business with sanctioned individuals or their companies.

“There are less direct consequences of sanctions as well,” says Moiseienko. “But they are still very important consequences. For example, banks in countries that don’t have to comply with those US sanctions still refusing the target as a customer. That’s not a direct consequence of sanctions, in the sense that that’s not required by them, but that really affects the lives of individuals concerned. We also looked at law enforcement investigations [into sanctioned individuals] that started after sanctions were imposed because sanctions have broadcast that allegation to the world that someone might have been involved in corruption or human rights abuse.”

Eva van der Merwe is Senior Programmes Director at International Lawyers Project. Prior to ILP, she worked at Transparency International for several years, as its UK legal counsel, then in its  Global Defence Program.

She points to the importance of sanctions beyond the immediate financial or travel bans, as evidenced through the research she and Anton undertook.

“An important finding was the space that sanctions provide to enable journalists to carry out their important work. We interviewed many journalists as part of the research [and] they spoke of how the threat of legal or other intimidation weighs heavily on their investigations. Reporting on, or referencing, a [sanctioned individual or entity] can serve in some ways as protection from libel action, allowing them to report more freely on an individual’s actions.”

In 2017, the US sanctioned Israeli billionaire Dan Gertler for corruption, banishing him from the U.S. dollar banking system. He made his fortune by buying mining operations in the Democratic Republic of Congo (DRC) at well below their value, then selling them at marked up prices to multinational companies, or even back to the DRC government.

Van der Merwe says journalists reported that these individuals are capable of building false public relations campaigns to portray themselves as philanthropists, which their work threatens.

In March 2023, 25 Congolese and international civil society organizations wrote a letter to the U.S. secretary of state, calling on the United States government to maintain sanctions against Gertler. In May 2024, media reported that Biden’s administration was looking to ease sanctions on Gertler and at least 30 of his companies, following Trump’s easing of sanctions on the billionaire in 2021.

A designation can help to challenge the status quo thinking and make it less acceptable to associate with that individual, Van der Merwe says. She gives the example of Isabel dos Santos, daughter of the former Angolan president, who is accused of defrauding the country of $US219 million.

“Isabel dos Santos regularly socialised in London at high-net worth society events, galas, art and fashion shows before her designation by the UK. It’s hard to precisely measure this type of impact, the social and political ostracisation that can occur in some countries, but we know that wide media reporting of designations and the illegal activity that led to a designation will certainly lead to some of these individuals – their families, children – being ostracised by the social, business and political circles they’ve seeking to influence, and that this can be a powerful consequence.”

Moiseienko says the first Trump administration was “pretty conventional” in terms of sanctions. “There were no great changes compared to, for example, the Obama administration, though there might have been some areas where there were differences of emphasis. I think Iran was an important one [for Trump], but sanctions continued almost on autopilot.”

The reason for this, Moiseienko says, is because US Treasury and the Office of Foreign Assets Control (OFAC), which administers sanctions, continued their work as usual.

“One of the big questions is whether we will see any change of direction this time, and what that will look like. What we’ve seen from Trump 2.0 suggests that there is going to be a much more interventionist approach taken by this administration to how the government as a whole runs, including Treasury, including OFAC. One example of that is the dissolution of Task Force Kleptocapture, the task force that was set up [in 2022] by the previous administration to enforce sanctions against Russian oligarchs.”

The Department of Justice initiative was disbanded on February 5 by the Attorney General.

“The enforcement of the Foreign Corrupt Practices Act has been suspended, and the enforcement of the Corporate Transparency Act has been halted by this administration. All of that leads me to believe that it is more likely that there will be a tangible difference as to how sanctions are used by this administration,” Moiseienko says.

As for the Global Magnitsky Act, Moiseienko says, “It’s important to understand that the Global Magnitsky Act is just one part of a much broader sanctions landscape in the US. A lot of sanctions are imposed based on country-specific sanctions programs. For example, there is a raft of Russia-related sanctions that are imposed on the basis of legislation separate to the Global Magnitsky Act. It’s perfectly plausible to expect Trump to offer some sort of relaxation of sanctions to Putin in the context of the ongoing negotiations over Ukraine.”

Van der Merwe says, “After the US enacted its own legislation on what are referred to as ‘Magnitsky-style’ sanctions, other jurisdictions followed suit. Several states including the UK, Australia, and Canada, introduced legislation enabling them to impose targeted sanctions upon individuals involved in human rights violations and corruption. The European Union has a sanctions regime for human rights violations, but not corruption.

“So, there is now a global framework on human rights and anti-corruption sanctions regimes that would continue to operate even if the US deprioritises the Global Magnitsky regime. However, any such action would inevitably be a significant blow to the impact of targeted sanctions. The power of the US dollar combined with the US’s position as a major financial hub and as a foreign policy power means that any step back by the US will be felt across the globe.”

Australia’s sanctions landscape

Australia operates two sanctions regimes, the United Nations Security Council sanctions and autonomous sanctions. As a UN Member State, Australia is required to implement sanctions under domestic law under the Charter of the United Nations Act 1945 (Cth) (UN Charter Act) and associated regulations. Australia’s autonomous sanctions fall under the Autonomous Sanctions Act 2011 (Cth) (ASA) and its associated regulations. The Consolidated List of sanctioned individuals and entities, numbering just over 8,000, was updated in March 2025.

Moiseienko says, “My view is that it’s a good idea for Australia to make more active use of these [ASA] powers. I think it’s important to make use of these powers in connection with potential wrongdoing in the Asia Pacific region, because Australia is such an attractive destination, including for people who have committed serious crimes overseas and might want to invest the proceeds in Australia then relocate to Australia with their families, and it’s quite right for Australia to have a sanctions regime in place that effectively precludes some of the worst offenders from doing that. It would be a very positive signal for Australia to be able to respond ‘No, you can’t come to Australia and invest in property here if you’ve been involved in corruption or human rights abuse’. So, it’s a missed opportunity that Australia isn’t implementing this legislation more vigorously.”

Sanctions are not ‘a silver bullet’

Van der Merwe says, “Sanctions are not a silver bullet. They are most impactful when used in coordination with other tools. States need to engage at the international level with inter-governmental organisations like the Financial Action Task Force (FATF) that leads global action on tacking money laundering, which is very often linked to corruption. Further action needs to take place in relation to corporate transparency and beneficial ownership.  Sanctions also need to be carefully calibrated with law enforcement action. Since sanctions only freeze assets, rather than seize them, it is important that sanctions are the beginning of action on corrupt actors rather than the end. Governments should be looking to increase capacity for law enforcement following the sanctions designation that allows for civil forfeiture and/or criminal action to take place, both of which significantly increase the possibility of seizure of corrupt assets not just freezing.”

She adds, “Law enforcement action should also be coupled with more engagement from the private sector and the regulated professions including lawyers.  From the perspective of the country where the sanctioned individual hails from, there should also be regulatory or institutional domestic changes to add legitimacy to the imposition of sanctions. Other complementary actions may include strengthened domestic legal and judicial reform, as well as empowered civil society organisations.”