…should I be “freaking out” about the impending report about me, my connections to Vladimir Putin and my money, apparently being released next Monday by the Treasury Department? This story from VICE News sure sounds like it. But how real is the threat?
Under the Combating America’s Adversaries through Sanctions Act (CAATSA), the Secretary of the Treasury, in concert with the Secretary of State and Director of National Intelligence (DNI) is supposed to generate such a report within 180 days to “the appropriate congressional committees.” How much of that repoirt will appear in easily-accessible public sources (e.g. NOT the Congressional Record or the Federal Register) that would alarm anyone holding the oligarchs’ assets is unclear. More importantly, the US government is not obligated to take any sanctions action based on the issuance of this report under CAATSA.
It is important to note that the report, in addition to uncovering the oligarch’s financial ties, is supposed to estimate the effect of sanctions on the US and its allies of imposing sanctions on this group – secondary sanctions. So, none of the oligarch’s money would be frozen. As the article notes, banks might want to close the accounts of these individuals so as to not potentially end up on the US’ bad side.
But should anyone really worry? Bank deposits are used as the financial fuel for lending activities – reduce the overall level of deposits, and that loan portfolio similarly has to be reduced. A credit crunch in the US or in areas allied with the US would invariably cause significant economic hardship, as the VICE report notes that 90 oligarchs (there’s a conjecture the report will show multiple hundreds of individuals) have over $384 billion in assets. Imagine what would happen if that much credit was sucked out of the global economy. So, it would not be unreasonable to find the report saying that the effect on, say, the EU economy, would be too severe to impose secondary sanctions on a significant number of oligarchs.
but, let’s say you’re risk averse and want to keeo your funds safe and preferably appreciating. What could you do? Just like in a recession, the world could see a flight to quality – in particular, valued physical goods. Investments in precious metals or real estate are likely to increase in value over time – if one is willing to be patient. After all, sanctions do not take over the title of assets – they merely prevent them from being utilized. If one can outwait geopolitical tensions, then one’s assets will eventually be usable.
Now, were I a bank or brokerage, would I be standing pat if that list of oligarchs becomes public on or after next Monday? Oh, heck, no. Not only would I – now – be working on the policies and procedures I will need should sanctions be imposed, but I’d also be ready to screen my customer data to see if any of these folks were on my books, and flag them so they can easily be identified if the need arises.
One more note: when it comes to Riussia, the Trump Administration has largely kept from the inflammatory rhetoric it has used on other countries. Even if the report guesses that the impact on the US and its allies of secondary sanctions on oligarchs would be nominal, it would not surprise Mr. Watchlist if it required an additional piece of legislation to force the imposition of those sanctions.
We shall see, won’t we? Monday is less than a week away…