Magnitsky legislation

Sergei Magnitsky was a Russian lawyer who uncovered large-scale tax fraud. While working for Hermitage Capital, a firm based in London and run by the US-born financier Bill Browder, he discovered that millions of dollars of Hermitage tax payments had been syphoned off into the pockets of Russian officials. He was arrested but refused to withdraw his testimony and died in 2009, after mistreatment in jail.

Bill Browder, now a UK citizen, started a campaign to have sanctions imposed on the officials involved – to get the officials banned from visiting the US and using the US financial system.

A Magnitsky Act naming the Russians involved was passed by the US Congress in 2012. It was later broadened to become the Global Magnitsky Act of 2016, applying to gross human rights abusers anywhere. Other countries, including Canada, Lithuania and Estonia have introduced their own versions of the legislation.

There was increasing pressure for the UK to follow suit. Various pieces of legislation came before Parliament, in the form of Private Members’ Bills and amendments to Government Bills, although “Magnitsky” did not appear in their official titles and they did not refer to Russia.

Arguments used against introducing Bills or changing existing law to provide Magnitsky legislation included questions about the definition of ‘gross human rights abuse’ and the suggestion that powers to sanction gross human rights abusers are already there in existing legislation. There are some who question the effectiveness of Magnitsky legislation: there are countless powerful officials who commit gross human rights abuses; choosing who to impose sanctions is likely to be a subjective business. Inconsistencies in application would make designations even more likely to be litigated.

The Magnitsky amendments to UK legislation were broadly welcomed, however. Two major pieces of legislation had ‘Magnitsky’ elements added to them: the Proceeds of Crime Act 2002 and the Sanctions and Anti-Money Laundering Bill (now the Sanctions and anti-Money Laundering Act 2018).

The Criminal Finances Act 2017 amended the Proceeds of Crime Act 2002 to expand the definition of ‘unlawful conduct’ to include gross human rights abuse or violation. After Opposition and Government amendments, the Sanctions and anti-Money Laundering Act 2018 includes gross human rights violation as a reason for imposing sanctions on a person or an entity.

After the passage of the 2018 Sanctions Act, the Government said it would bring forward more detail on Magnitsky sanctions in the form of secondary legislation using the powers in that Act.

The Government announced the first new sanctions using the Sanctions Act in July 2020. They imposed asset freezes and travel bans on Saudi citizens alleged to have been involved in the murder of Jamal Khashoggi, the Saudi journalist murdered in the Saudi Embassy in Istanbul. Also targeted were Russian officials allegedly involved in the mistreatment of Sergei Magnitsky in a Moscow jail.

Other countries have introduced Magnitsky-style sanctions legislation or are working on it. The European Commission started organising EU Magnitsky legislation in December 2019.