Russian oligarchs have few rights when U.S. freezes assets

The sanctions imposed by the Biden administration during the past few weeks against dozens of Russian oligarchs and other elites raise questions about protections against unreasonable searches and seizures and guarantees of due process under the U.S. Constitution.

But as a new ABA Legal Fact Check posted on March 28 explains, the restrictions are perfectly legal, rooted primarily in two statutes, the National Emergencies Act and the International Emergency Economic Powers Act (IEEPA). Enacted in 1977, IEEPA authorizes the president to block property, prohibit transactions or otherwise regulate assets in which a foreign person has an interest, in response to the president’s declaration of a national emergency.

The administration has announced a wide range of sanctions against Russian oligarchs, among scores of other Russian interests, accusing them of enriching themselves at the expense of the Russian people and providing resources to support President Vladimir Putin’s Feb. 24 invasion of Ukraine.

Many of those sanctioned have had any assets subject to U.S. jurisdiction “blocked,” or frozen, meaning that the sanctioned party cannot have access to them until the sanctions are lifted. Once the names of oligarchs or other parties subject to U.S. sanctions are posted publicly, it is up to banks and other businesses in the United States to make sure they freeze any property owned by those parties, including assets held under an alias or by an entity 50% or more owned by sanctioned parties.

Blocking sanctions are applied immediately because of the risk that a party subject to such sanctions will seek to move their assets if notified in advance. Those impacted by blocking sanctions can contest the sanctions by filing a petition with the U.S. Department of Treasury’s Office of Foreign Assets Control or in federal court, as IEEPA contemplates the availability of judicial review over sanctions determinations.

Over the 45 years since IEEPA was implemented, the government has prevailed in nearly all lawsuits, which typically challenge the actions on Fourth and Fifth Amendment grounds. Challenges can take several years or longer to work their way through the courts, the ABA Legal Fact Check noted.

Related links:

• National Emergencies Act and the International Emergency Economic Powers Act
  
  
• Key Biden administration announcements:
  
  
  • Executive Order on Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine (Feb. 21)
    
  • Attorney General Merrick B. Garland Announces Launch of Task Force KleptoCapture (March 2)
  • Fact Sheet: The United States Continues to Target Russian Oligarchs Enabling Putin’s War of Choice (March 3)
    
  • U.S. Departments of Justice and Treasury Launch Multilateral Russian Oligarch Task Force (March 16)
    
  • U.S. Treasury Sanctions Russia’s Defense-Industrial Base, the Russian Duma and Its Members and Sberbank CEO (March 24)
    
• Related podcasts sponsored by the ABA Standing Committee on Law and National Security
  
  • The Law of War with Judge James Baker (Part 1)
  • The Law of War with Judge Baker (Part 2)
    
  • Crackdown on Russia's Dirty Money with Brian Egan 
• Current U.S. sanctions against countries and organizations
  
• ABA Journal stories related to Russia and its invasion of Ukraine