Asset Tracing also known as Asset Tracking in any non-European or Offshore jurisdiction is always a complex process fraught with difficulty, especially when the assets have been deliberately concealed and never more so when we are dealing with Russia and the former CIS – Confederation of Independent States.
Russia Asset Tracing – Background
Russia has been an effective autocracy since Vladimir Putin took on the mantle of President in 2012 having formerly held the office from 1999 to 2008. A former intelligence officer, Putin recently secured his Presidency “for life” by effectively changing the Russian constitution to ensure that he remains in office until 2036 by which time he will be 84.
The CIS (former) the Confederation of Independent States had its roots in the old Russian Federation. When the USSR began to fall in 1991, the founding republics signed the Belavezha Accords on 8 December 1991, declaring that the Soviet Union would cease to exist and proclaimed the CIS in its place, and at the time as well as Russia, it was made up of Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan with Georgia joining in 1993. Eight of the nine former CIS member states still participate in the CIS Free Trade Area. (CISFTA)
Legal Structures
The Russian civil court system, as one would expect, is complicated. In effect it has two branches: the arbitrazh (commercial) courts, which handle commercial disputes and has exclusive jurisdiction over corporate matters, and the courts of common jurisdiction, which handle other types of cases mostly involving individuals and in some cases includes criminal actions.
Regulations governing Asset Tracking and recovery in Russia consist of international conventions, various legislative acts, governmental and presidential decrees and other sub-legislative acts; however these measures are draconian, some might say deliberately.
Compensation for damage in civil proceedings is allowed in Russia and may be sought against an alleged wrongdoer (either in contract or in tort). Depending on the nature of the injured party and the wrongdoer, the compensation claim, however, must be filed either with the arbitrazh (commercial) court (if both parties are legal entities) or with courts of common jurisdiction if individuals are involved.
Legal aspects of such claims are regulated by the Civil Code of the Russian Federation (Civil Code). Procedural aspects are governed by the Arbitrazh Procedure Code or Civil Procedure Code.
Where former CIS countries are concerned each former member country of course has its own legal structure and process for Asset Recovery, however they follow the format laid down by the Economic Court of the Commonwealth of Independent States.
The Court is empowered to consider the disputes in the fulfilment of economic commitments in accordance with international treaties within the framework of the Commonwealth of Independent States. The Court considers other disputes under the agreement of the participating states. It is also empowered to interpret international treaties and the acts of the CIS bodies.
Pursuing assets through the local systems is far from an easy task. While Russia belongs to the continental system of law, court rulings or precedents are not considered to be an official source of law meaning that the legal interpretation provided by higher courts is in turn of great importance to lower courts.
Cross Border Investigations
Needless to say, European investigators are seen as interlopers particularly in Russia and their activities are generally restricted, the same in most of the former CIS countries.
To carry out the necessary investigations required to trace assets in these jurisdictions Asset Tracing professionals have to rely on more traditional forms of intelligence gathering utilising both OSINT (Open Source Intelligence) and HUMINT (Human Intelligence).
Matrix Intelligence routinely operates within these jurisdictions and our cross-border investigations are exceptional, seamlessly obviating the restrictions normally associated with these type of inquiries. Utilising proprietary protocols, we can quickly deploy both OSINT and local HUMINT, via our network of long-standing and highly capable sources and there is little information in these jurisdictions which we are unable to uncover, including:
- Subject whereabouts and movements.
- Real estate & commercial property ownership.
- Vehicle and vessel ownership.
- Corporate affiliations and Ultimate Beneficial Ownership.
- Source of wealth.
Having conducted extensive multi-jurisdictional and cross border complex investigations, we are experts at assisting with Asset Tracing and Recovery.
The outcome of this combined methodology is a balanced and highly-effective approach that enables our clients to have access to high-level, strategically-actionable intelligence and information that helps them to further their personal and commercial aims.
International Recourse
The formation of the new Russian federation under then General Secretary Mikhail Gorbachev saw previously unknown individuals who, through taking full advantage of privatisation – suddenly becoming super-rich spawning the birth of the so called Oligarch; a term coined from the Greek literally meaning “the rule of the few”.
While the term Oligarch is normally attributed to Russians, their emergence was just as prevalent throughout the CIS and for the same reasons. These individuals amassed billions in a very short period of time which saw them emulating their western counterparts, amassing vast portfolios of property and assets outside of Russia and the CIS, particularly in London.
Of course, some of these assets were undoubtedly legally amassed; it opened the channel to many Russians and businessmen from the former CIS using London as a laundromat for a variety of ill-gotten gains.
Unfortunately, the UK welcomed this huge influx of investment from both legal and illegal sources with open arms in turn leaving it, particularly London, open to substantial financial abuses, as a new breed of “facilitators” turned it from the Global centre for finance into the epicentre for money laundering.
For Asset Tracing professionals this would seem an open treasure chest from which assets could be easily seized, however, like all wealthy businessmen such assets are held very much at arm’s length from complex networks of Trusts where assets are held by designated trustees, often lawyers through to offshore corporations where beneficial ownership is concealed by complex structures across many jurisdictions.
Unexplained Wealth Orders
The Criminal Finances Act introduces new measures to tackle Asset Recovery and money laundering in the UK. A key element of the Act is Unexplained Wealth Orders (UWOs) – an investigative tool to help law enforcement act on corrupt assets.
Where assets have been salted away in the UK, the UK national Crime Agency (NCA) can and does use UWOs to seize assets obtained by fraud or other nefarious means.
A recent example of the effectiveness of UWOs saw a £1.19 million Cartier diamond ring purchased by a jailed Azerbaijani banker seized by the NCA as part of an ongoing Unexplained Wealth Order case.
London – The Epicentre for Legal Excellence
Of course, hidden assets, where jurisdiction can be proved, can be pursued via the High Court in London; for many years a benchmark for legal excellence and template for many other jurisdictions around the World.
A current case heard in the family division sees a complicated and somewhat bizarre case involving asset recovery by plaintiff Tatiana Akhmedova of assets owned by her former husband Russian billionaire Farkhad Akhmedov.
In precis, the case has seen lawyers and asset tracing professionals challenge Mr Akhmedova´s fortune to seize sufficient assets to settle his divorce obligations.
Mr Akhmedov lost the case some time ago and was subsequently ordered to pay his wife in excess of £350m plus their art collection; worth at the time, about £90m, an amount equivalent to 41.5% of the family’s wealth. His numerous bank accounts, including those in Liechtenstein and the Isle of Man, were subject to a mareva injunction [a freezing order] issued by the High Court in London, however, to date not a rouble has been paid to his ex-wife.
While the case continues, it has proven that Asset Tracing Professionals can furnish intelligence and data not normally available to even top 500 legal firms and the deployment of Asset Tracking and Litigation support by specialist Intelligence firms is ever increasing.
Matrix Intelligence has substantial experience and a proven track record of Asset Tracing globally. We deliver reliable and actionable intelligence to lawyers, financial firms, corporate clients, third party funders and HNW individuals. While operating internationally, we have exceptional capabilities in Russia, the former CIS countries, Eastern Europe, the Middle East and throughout the world´s offshore banking jurisdictions.
To discuss Asset Tracing, Litigation Support please contact is in confidence to discuss exactly how Matrix Intelligence can assist with either you or your clients’ pursuit of recourse. You can contact our London office on +44 (0) 203 873 1089, send us an email to info@matrix-intelligence.com or visit our website at www.matrix-intelligence.com.
