UPDATE: Since this story ran on March 11, several countries have added new sanctions against wealthy Russians. At least eight countries and the European Union have instituted sanctions targeting Russian individuals since President Vladimir Putin invaded Ukraine last month.
In addition, on Friday Italian authorities reportedly seized a $578 million superyacht reportedly controlled by Andrey Melnichenko, a Russian billionaire sanctioned by the European Union.
This story has been updated to reflect these developments.
The United States and other countries rushed to slap sanctions on Russia following President Vladimir Putin’s decision to invade Ukraine. Most target its major industries, like defense, oil and gas. But much of Russia’s ostensible wealth is held by dozens of billionaires, and they keep it in accounts and assets, like superyachts, around the globe. For them, national sanctions are easily evaded.
Seeing that, and noting oligarchs’ potential leverage with Putin and other Russian government officials, nations have imposed sanctions on those oligarchs personally, freezing their assets and frustrating their efforts to make — or spend — money. On March 3, the Biden administration announced new sanctions on “Russian elites and their family members who enable Putin,” and new State Department visa restrictions on 19 unnamed oligarchs and several dozen family members.
What’s an oligarch? Who are they? Where are their superyachts? How is this supposed to end the war in Ukraine? Grid takes a look.
What’s an oligarch?
Oligarchy is a term for governance by a few at the very top. “Oligarch” has become a common term for wealthy Russian elites who are thought to be close with the Kremlin or Putin himself, and who are believed to have derived their wealth at least in part from their relationship with the state. In 2019, Putin himself defined oligarchs as “those who use their proximity to the authorities to receive super profits.”
After the fall of the Soviet Union in 1991, the Russian government transferred many state-run industries to private ownership, and much of the nation’s wealth came under the control of a small group of men with political connections.
Brooke Harrington, a sociology professor at Dartmouth College, recently explained the practical function oligarchs serve in Putin’s Russia: “They provide invaluable public support for the regime, lead key companies and institutions, and distract attention from and, by some accounts, help conceal the president’s own enormous wealth.”
How many oligarchs does Russia have?
Because “oligarch” is not a formal designation, there is no exact count. In 2018, the Treasury Department produced a list of 96 Russian individuals it considered to be oligarchs. It was drawn up mostly by pulling Russian names from Forbes’ list of wealthiest people. Russian dissident Alexei Navalny’s Anti-Corruption Foundation has identified 35 “kleptocrats and human rights abusers” it deems worthy of sanction, although some on the list are government functionaries, not wealthy oligarchs.
How many Russian oligarchs are facing sanctions?
With so many countries considering and levying sanctions in response to Russia’s invasion, the answer is a moving target. As of Thursday, the United States, Canada, the United Kingdom, Australia, New Zealand, Japan, Switzerland and the European Union have placed sanctions against at least 24 wealthy Russian individuals.
How do sanctions against an individual work?
First, his or her name and any aliases, business names, sometimes even identifiers of their boats or planes are put on a public list maintained by the sanctioning government. That list tells banks who they should avoid. Financial institutions are expected to do the rest.
Sanctions aren’t bulletproof. Banks don’t closely vet every transaction they handle, and if a sanctioned name is not obviously linked to an account or transaction, banks may not act. Anonymous shell companies, numbered cryptocurrency accounts and straw-man arrangements (having someone else make transactions on behalf of a sanctioned individual) are possible tools to avoid sanctions. Another popular strategy: Moving assets to countries that don’t cooperate with sanction regimes.
How are sanctions on oligarchs supposed to stop Russia’s invasion of Ukraine?
The logic is straightforward: Sanctions pressure those with influence in Russia to change the direction of the war in Ukraine. If oligarchs are the most influential figures in Russian politics, sanctions are a direct way to twist their arm to get on the side of peace.
The impacts of these sanctions can be immediate. Russian oligarch Alisher Usmanov reportedly had to say goodbye to his superyacht crew, for instance, because U.S. and EU sanctions meant he had no way to pay his crew’s wages. Usmanov also had a practical reason to let his crew go: German authorities have prevented the vessel from leaving its dock in Hamburg.
Oligarch Roman Abramovich, sensing sanctions were possible, tried to unload his ownership of the Chelsea FC British soccer club earlier this month. With British sanctions against Abramovich in place Thursday, Abramovich’s assets are frozen. He is barred from transactions that would allow him to transfer ownership of the team. (A special U.K. license allows it to continue operating, so Chelsea ticket holders appear safe for now.)
Did you say superyachts?
Yes. Many oligarchs have them. Grid has identified 33 superyachts belonging to reputed oligarchs, including 16 whose owners are under sanction. The nearly three dozen yachts Grid identified are worth an estimated total $5.9 billion. For comparison, Ukraine’s 2021 defense budget was reportedly $4.2 billion.
They’re an ostentatious status symbol: They are at least 79 feet long, often hundreds of feet longer, cost hundreds of millions to dollars to build and are wildly expensive to operate.
“We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets,” Biden said in his State of the Union speech last week, garnering sustained applause. “We are coming for your ill-begotten gains.”
Where are they?
Russian oligarchs’ superyachts are all over the world, according to data gathered by Grid. For a complete picture, see the map and tables below.
As of Thursday, many are in places like the Seychelles or the Maldives, which are both nice places to be and also do not cooperate with U.S. sanctions. Only one appeared likely to be in Russian waters: the boat reportedly owned by Putin himself.
Will the superyachts be seized?
U.S. officials have pledged to track and seize assets, including superyachts, belonging to sanctioned oligarchs. On March 2, the Justice Department announced the new interagency Task Force KleptoCapture “to hold accountable corrupt Russian oligarchs.”
“To those bolstering the Russian regime through corruption and sanctions evasion: we will deprive you of safe haven and hold you accountable,” said Deputy Attorney General Lisa O. Monaco, in announcing the new task force. “Oligarchs be warned: we will use every tool to freeze and seize your criminal proceeds.”
Three bills in Congress would enhance the administration’s ability to seize oligarch property and even use it to fund Ukrainian defense efforts. In addition, governments in France, Italy and around the world have efforts underway to identify and lock down assets belonging to sanctioned oligarchs.
How many superyachts have been seized?
Four superyachts belonging to Russian oligarchs have been reported seized as of Thursday, and a fifth has been effectively impounded in its maintenance dock.
- Sailing Yacht A: The 470-foot Sailing Yacht A, the biggest of its kind, has been frozen in the Port of Trieste by Italian financial police, according to Ferdinando Giugliano, an Italian government spokesperson. The yacht is worth an estimated 530 million euros, or $581 million, and is owned by Russian billionaire Andrey Melnichenko. A video shows authorities boarding the vessel.
- Amore Vero: On March 2 at the La Ciotat shipyard, French authorities took control of the 289-foot superyacht owned by Igor Sechin, a former Russian deputy prime minister and current CEO of Rosneft. The EU has described Sechin as one of Putin’s “most trusted and closest advisors, as well as his personal friend.”
- Lady M: A few days later, Ferdinando Giugliano, media adviser to Italy’s prime minister, tweeted a picture confirming that the Lady M, a 213-foot superyacht owned by Alexey Mordashov, had been seized in the Italian port of Imperia. Mordashov, worth an estimated $22 billion, also reportedly owns the larger 464-foot Nord, last seen Thursday anchored in the Seychelles.
- Lena: On March 5, Giugliano tweeted that Italian authorities had seized the Lena, belonging to billionaire Gennady Timchenko, at port in Sanremo. Timchenko is one of Russian leadership’s “inner circle,” according to the Treasury Department, who sanctioned him in 2014. Putin is personally invested in Timchenko’s commodity trading firm Gunvor, according to the Treasury Department.
- Dilbar: The world’s largest superyacht by tonnage, the 512-foot Dilbar, is being held by German authorities at its maintenance dock in Hamburg. German authorities told Forbes they are not allowing the boat to leave. The $600 million superyacht is owned by Usmanov, one of Russia’s wealthiest men, according to Forbes.