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Putin’s Long Arm: How Russia uses Interpol to harass opponents

Posted by Red Notice
on 20 Feb 2015 | 0 comments
Tagged in: Interpol

By Ted R. Bromund, The Weekly Standard, 2nd March 2015

In Chechnya, Georgia, and Ukraine, Russia works through bribery, fear, and force to destroy its opponents. In the West, it works through Interpol and the U.S. Treasury. If Moscow decides to target you, being in the United States won’t protect you from Russian harassment. In fact, it makes you a better victim.

Contrary to what you see in the movies, Interpol isn’t an international police force. It doesn’t arrest anyone. It’s more like a global bulletin board for national law enforcement agencies. Every country is a member except North Korea. And one of the privileges of membership is that you can request that Interpol issue a “Red Notice,” which asks other members to detain and extradite a wanted individual.

 

By the terms of its 1956 constitution, adopted in large part to assure Washington that the organization would not pursue asylum-seekers from behind the Iron Curtain, Interpol is not supposed to engage in activities of “a political, military, religious, or racial character.” In other words, it’s supposed to pursue only ordinary crimes. But in 2013, Interpol issued 8,857 Red Notices—about one every hour. At that rate, it’s impossible for Interpol to be sure that it’s only pursuing murderers, child molesters, rapists, and the like. It has to trust its member nations.

And that’s the problem: A lot of Interpol’s members aren’t trustworthy. There is an appeal procedure through the Commission for the Control of Interpol’s Files (CCF), but in 2013 the CCF issued only 122 conclusions. Most Red Notice requests are granted in hours, the process is electronic, and it requires no evidence: All you have to do is assert that a valid warrant exists. In Russia, this is a mere formality.

 

In his new bestseller Red Notice, U.S.-born British financier and critic of the Putin regime Bill Browder writes compellingly of his fight for justice for Sergei Magnitsky. Browder himself has successfully fought off three Russian requests for Red Notices. But he’s more famous, and richer, than most of Vladimir Putin’s adversaries. And, sadly, he was wrong when he wrote that, though a Red Notice might stop him from traveling, he was at least safe in Britain.

Browder was safe from extradition, yes. But he wasn’t necessarily safe from the U.S. Treasury. On the form you fill out when you request a Red Notice, there’s a box to check if you want to make the Red Notice public on Interpol’s website. And once a Red Notice is public, there are consequences, even if the person targeted is a completely innocent victim of foreign persecution and is never extradited.

 

Ilya Katsnelson knows those consequences. Much of his harrowing story is public knowledge: A U.S. businessman living in Denmark, he was arrested in Germany in 2008 on the strength of a Red Notice issued at Russia’s request as part of its politically motivated vendetta against Mikhail Khodorkovsky’s Yukos oil company. Katsnelson was held for two months in a German maximum security prison. 

 

What hasn’t been revealed before is that Katsnelson wasn’t just imprisoned. His account at Citibank was closed in late 2007—his investment banker told him privately this was because of his “problems with the Russians”—his assets sold at considerable loss, and a cashier’s check sent to his attorney. Even today, his Red Notice asserts that he is wanted for fraud and money laundering.

 

Katsnelson isn’t the only victim. Pavel Ivlev, a Russian lawyer and now a refugee in the United States, was also charged (as the Red Notice puts it, with “large scale fraud”) in connection with Yukos. In 2014, his cash accounts with Chase were closed and, as a letter from JPMorgan Chase put it, the firm found it “cannot continue to offer you brokerage services.” Several other major banks have also rejected his business.

 

The same is true of Andrey Leonovich, the former treasurer of Yukos, now living in the United Kingdom and also accused, via a public Red Notice, of money laundering. His firm was kicked out of a prominent U.S. private equity fund, and a major U.K. asset management firm refused his personal business. Not only that, but Ivlev knows of two other cases in Britain and Spain where Yukos veterans were treated similarly, and I know of at least one other Russian-inspired case unconnected to Yukos.

 

Here’s what’s happening: Red Notices that nations want to make public are visible on Interpol’s site and through LexisNexis. U.S. banks, and banks doing business in the United States—which is most of them—are subject to the due diligence requirements of the U.S. Treasury, including the requirement to know their customers. When specialist due diligence firms review new or upgraded customer accounts, one of the sources they use are the public Red Notices—and any hit, de facto, means a rejection from the bank. It’s not worth the risk of a fine—which can run into hundreds of millions of dollars—to do anything else.

 

The irony is that the due diligence firms are seeing the abusive Red Notices that Russia, and other nations that use Interpol for political purposes, want everyone to see: This is an instance where openness, perversely, is part of the problem. A further irony is that the international system of know-your-customer requirements, created to stop money laundering, is now being used by Russia to punish the victims of the regime’s thievery. What is not ironic is that the effects of being the subject of an abusive Red Notice, thanks to the way the notice reverberates through the financial system, are far more wide-ranging than merely preventing the victim from traveling without risking extradition to Russia.

 

It’s not clear that the banks, or the due diligence firms, fully understand what they’re doing. (All the firms mentioned in this article declined to comment or did not reply to a request for comment.) The banks are merely following orders—in this case, to avoid potentially risky customers. The due diligence firms may not appreciate the workings of Interpol’s Red Notice system: Their interest, as a selling point to their clients in the banks, is in having the broadest coverage of potential risk. 

 

Nor is it clear whether the financial impact of Russia’s Red Notices is deliberate, or merely an unintentional side effect of their broader abuse of Interpol. But a former Justice Department official who specialized in Russian organized crime cases told me that he doesn’t doubt that the Russians now know—even if they didn’t when they started abusing Interpol—exactly what they’re doing: They’ve committed enough crimes, and have had enough difficulties moving their own ill-gotten gains around, to know how to manipulate the West’s systems.

 

The frightening thing about all of this is that it could happen to anyone Russia takes a dislike to. It’s difficult to live in the United States without access to the banking and financial system, and together, Russia, Interpol, and the U.S. Treasury can take that away from you. When it happens, the U.S. government won’t stick up for you, Interpol’s processes are slow at best and useless at worst, and the Russians won’t relent.

 

Late last year, Karen Dawisha, author of Putin’s Kleptocracy, argued in the New York Times that the West’s strategy of trying to shape Russia by including it in Western institutions had failed, and that those institutions now risk being undermined by Russian actions. In such cases, she said, the West should defend its institutions by kicking Russia out.

 

Interpol is a case in point. Russia was admitted in 1990. If Moscow had decided to use Interpol for its actual purpose—to pursue genuine criminals—admitting it would have been wise. For undoubtedly, Russia has genuine criminals, lots of them. But it so happens that the worst criminals are sitting in the Kremlin, manning the hotline to Interpol, which does not have the time, the resources, or the inclination to sift the good cases from the bad before it acts. Since Russia won’t respect Interpol’s constitution, Interpol should apply its own sanctions and suspend Russia’s membership.

 

Until then, the United States and other democracies should create a white list of targets of political persecution and put Putin’s victims—and other victims of politically motivated Red Notices—on it, thereby shielding their ability to travel in the West and use the financial system. We can’t save everyone from the world’s autocrats. But we can at least ensure that, here in the United States, we don’t do their persecuting for them.

 

Ted R. Bromund is senior research fellow in Anglo-American relations at the Heritage Foundation’s Margaret Thatcher Center for Freedom.

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