The first designations of individuals and entities sanctioned pursuant to the Global Magnitsky Human Rights Accountability Act (“Global Magnitsky”) are expected shortly. Congress enacted Global Magnitsky in late 2016, authorizing the President to seize property from and deny visas to:
- Foreign parties responsible for gross human rights violations committed against individuals who seek to promote human rights or to expose illegal activity carried out by government officials, or
- Government officials responsible for, or complicit in, significant acts of corruption.
Foreign persons who have materially assisted the significant acts of corruption may also be sanctioned. Global Magnitsky expanded on the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012. The original sanctions targeted Russian officials alleged to have engaged in human rights violations and public corruption.
The President began the implementation process in September 2017 by delegating his authority to administer sanctions imposed under Global Magnitsky to the Secretaries of the Treasury and State. In practice, the designation process resembles that by which Specially Designated Nationals are identified. The iterative, interagency process is led by the United States Treasury’s Office of Foreign Assets Control Global Targeting Office (“Global Targeting”). Global Targeting works closely with other relevant stakeholders, including the Department of Defense, Department of State, Department of Energy, various law enforcement agencies, and the intelligence community, to build a comprehensive case against the potential target and make an ultimate determination.
Separately, the Chair and Ranking Member of enumerated House and Senate committees (e.g., the Senate Committee on Foreign Relations) can submit parties thought to have engaged in sanctionable conduct directly to the President. Those individuals then go through the process described above, with a determination being made by the President within 120 days. Notably, in August 2017, Senator Ben Cardin, the Ranking Member of the Senator Foreign Relations Committee, along with Senator John McCain, submitted a confidential list of 20 parties for possible Global Magnitsky sanctions. A determination on these twenty parties is imminent.
Global Magnitsky is the continuation of two recent trends with respect to sanctions: first, the transition towards sanctioning individuals, entities, and industries rather than commerce with an entire country, and second, the increased involvement of Congress in the listing and delisting process. For example, prior to removing a party from Global Magnitsky sanctions, the President must provide ample notice to Congress, including the specific reason for the determination (e.g., a significant change in behavior).
While it remains to be seen how aggressively the President will use Global Magnitsky to combat human rights abuses and public corruption, the substantial penalties would effectively cut off listed parties from the U.S. financial system. Practitioners should advise clients to carefully monitor their behavior in light of this new sanctions regime.