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The United States recently

published the first Magnitsky Listof Russian individuals who it

believes were involved in the brutaltorture and death while in state

custody of a Russian lawyer, as well asthose committing gross human rights

violations against other Russians. Thepersons identified are to be blocked

from entering the U.S. In addition, they

will be blocked from accessing U.S.financial markets and property and any

other assets would be subject to seizureif they come under U.S. jurisdiction.

The bipartisan bill that gave rise to thisprocess was approved by Congress and

signed into law by President BarackObama in December 2012.

The Magnitsky Rule of Law

Accountability Act of 2012 is named

after Sergei Magnitsky, a Russianlawyer who was illegally detained,

brutally tortured, and died in prison

because he exposed a multi-million-dollar scheme to defraud Russian

taxpayers. His death has come tosymbolize what can happen to

individuals in Russia when they stand

up to forces of corruption.1 Themeasure builds upon a long history of

anti-corruption efforts by the UnitedStates and is a signal to Russia, and

other foreign governments, that therewill be political and economic

consequences for such activities.2 The

law could also signal a trend of morespecialized sanctions lists cropping up

in the future, as members of bothchambers of the U.S. Congress initially

sought for the bill to go beyondsanctioning violations within the

Russian Federation and for it to applyto gross human rights abuses

worldwide.

Background to the new law

The Magnitsky case started with theexpulsion from Russia of William

Browder, a British American-borncitizen. Browder is the co-founder of

Hermitage Capital, a global investmentadvisory firm specializing in emerging

markets. At the time of the incident,

Hermitage Capital was one of the

larger investment advisory firms inRussia. Magnitsky, who worked inRussia for an American law firm, was

advising Hermitage Capital whenHermitage Capital disclosed to the

media evidence of Russian corruption.A 37-year-old husband and father,

Magnitsky was arrested on false

charges and was held for one year in aRussian prison without any judicial or

due process. He was investigated bythe same law enforcement officials that

he had accused of stealing from theHermitage Capital group of companies.

The criminal conspiracy also resultedin, among other things, a

$230,000,000 tax refund from theRussian Treasury. On the last day of his

life, 6 July 2011, Magnitsky was beatento death by eight prison guards.

According to the report issued byRussias Human Rights Council, which

investigated the incident, the

paramedics sent to treat Magnitskywere deliberately kept outside of his

cell for more than one hour. He died injail. Those responsible for Magnitskys

torture and death have not beenarrested.

The United States Congresscharacterized the Magnitsky matter as

emblematic of a broader pattern of

disregard for the numerous domesticand international human rights

commitments of the RussianFederation and impunity for those who

violate basic human rights andfreedoms.3

A concerted response

The incident helped galvanize the

human rights caucus in the House andSenate and led a bipartisan group of

legislators in both chambers tointroduce a measure to impose

sanctions on persons that wereresponsible for or benefited financially

from the detention, abuse, or death of

The Magnitsky List: a trend-setterprocess in global human rights and

compliance law?

Earlier this month, the U.S. government published a list of individuals who it

believes were involved in the torture and murder of Sergei Magnitsky, a Russian

lawyer who sought to expose high-level corruption in Russia. Jason Poblete

examines the development and asks whether the law which gave rise to the

publication of the list may prove to be a template for similar types of sanctions.

The Magnitsky Rule of Law Accountability Act of 2012 isnamed after Sergei Magnitsky (pictured, left), a Russianlawyer who was illegally detained, brutally tortured, anddied in prison because he exposed a multi-million-dollarscheme to defraud Russian taxpayers.

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Sergei Magnitsky, were involved in thecriminal conspiracy uncovered by

Sergei Magnitsky, or were responsible

for extrajudicial killings, torture, orother gross violations of inter-

nationally recognized human rightscommitted against individuals seeking

to expose illegal activity carried out byofficials of the Government of the

Russian Federation or to obtain,exercise, defend or promote

internationally recognized human

rights and freedoms anywhere in theworld. 4

This human rights sanctionsproposal, ironically, was eventually

incorporated into, and helped securepassage of, U.S.-Russia trade

legislation that had been languishing in

the Congress for several years.Following the Russian Federations

accession into the World Trade

Organization, increasing pressure fromcommercial interests led to a campaign

to grant Russia permanent normal

trade relations (PNTR) status with theUnited States. In order to do so, the

Cold War-era Jackson-Vanikcertification requirements of the Trade

Act of 1974 had to be repealed.However, in light of increasing reports

about the murder of independentjournalists in Russia, targeting of civil

society groups, the overall

deterioration of human rights inRussia, and the lack of action in

securing justice for Sergei Magnitsky,an alternative to Jackson-Vanik was

needed. 5

Action under the law

The Magnitsky law directs theSecretary of State to publish a list of

persons involved in the events leading

to Magnitskys death as well as othersinvolved in extrajudicial killings,

torture, or other gross violations of

international recognized human rights.It imposes a visa ban, freezes assets,

and blocks access to U.S. financialmarkets.

The Magnitsky List can be updatedjust about any time, as new

information becomes available, andmust generally be submitted in

unclassified form; however, names can

be added in a classified form if deemedvital to U.S. national security interests

and consistent with congressionalintent and purposes of the law. 6 7 The

information used to generate thenames can be from U.S. and non-U.S.

sources. 8 The unclassified list will beavailable to the public and be published

in the Federal Register. 9 The law

expires in 2022.

In order to be removed from the list,the President must certify to theCongress 15 days before removing a

name that credible information existsthat the person did not engage in the

activity for which the person was addedto the list or the person has been

prosecuted appropriately for the

activity. 10

The person can also be removed if

he or she has credibly demonstrated asignificant change in behavior, has paid

an appropriate consequence for theactivities in which the person has been

engaged, and has credibly committedto not engage in activities that led to

the listing in the first place.11

In addition to revoking visas andblocking future entry into the U.S. of

designated persons, the law also blocksaccess to U.S. financial markets and

freezes assets. Pursuant to theInternational Emergency Economic

Powers Act (IEEPA), the Presidenthas the authority to freeze and prohibit

all transactions in property and

interests in property of any personlisted under the law if such property

and interests in property are in theUnited States, come within the United

States, or are or come in possession orcontrol of a United States person.12

On 12 April, the Treasury releasedthe first list of designations under the

Magnitsky Act totalling 18 names

(although the State Department hassaid that it has in addition drawn up a

classified list). If Congressional humanrights activists, particular those

legislators who were involved in thedrafting of the Magnitsky law, believe

that critical omissions exist, they can

Links and notes1 In addition to Magnitsky, See Sec. 402(a)(15) of P.L. 112-208 for a complete list of unresolved

murders as well as the ongoing and harsh imprisonment of other Russians who have tied to expose

government corruption.2 The Magnitsky Law provisions were included as part of a legislative proposal included in H.R. 6156

that was signed into law by President Barack Obama on 12 December 2012. H.R. 6156 was

approved by the House of Representatives on 16 November 2012 by a vote of 365-43; the Senate

approved it by a vote of 92-4 on 6 December 2012.3 P.L. 112-208, Sec. 402 (a)(12).4 S. 1039, Sergei Magnitsky Rule of Law Accountability Act of 2012, (Related Bills: H.R. 4405 and S.

3406; introduced in the Senate on 19 May 2011, available at

http://www.gpo.gov/fdsys/pkg/CRPT-112srpt191/pdf/CRPT-112srpt191.pdf.5 Despite the successful passage of Russia PNTR, there was considerable opposition from various

pockets of legislators in the House and Senate to the repeal of Jackson-Vanik certification

requirements that have come to symbolize in Russia, and other countries, the importance of respect

for human rights. These legislators, whose support was needed to secure passage of the Russia

PNTR measure, were persuaded to vote for the bill only because the Magnitsky provisions were

included. Many legislators speaking during debate on the legislative package underscored that were

the two to be de-linked, they would not support granting Russia the status of a preferential trading

partner. While not as strong as Jackson-Vanik from a foreign policy standpoint, it keeps the issue of

human rights at the forefront of U.S.-Russian relations for at least ten more years.6 P.L. 112-208, Sec. 404 (b) & Sec. 404 (c)(1).7 P.L. 112-208, Sec. 404 (c)(2).8

P.L. 112-208, Sec. 404 (c)(3).9 P.L. 112-208, Sec. 404 (c)(4).10 P.L. 112-208, Sec. 404 (d)(1) and 404 (d)(2).11 P.L. 112-208, Sec. 404 (d)(3).12 P.L. 112-208, Sec. 406 (a) and 406 (b). Note: There are national security interest waivers for both the

visa and property blocking provisions of the law.13 The list and new regulations will likely be published in several U.S. government websites including the

Department of State as well as the Treasury Department. See

http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-

Control.aspx.

The Magnitsky List can beupdated just about any time, asnew information becomesavailable.

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and other factors are a powerful forcein policy and law-making. As

governments, NGOs, and civic-minded

corporations seek solutions to matterssuch as human rights abuses, sex

trafficking, child labour, and otherchallenges, measures such as the

Magnitsky law could become morecommon.

things, banning adoptions of Russianorphans by American citizens, it is

popular in DC foreign policy circles and

has started to generate interest in othercounties who may adopt similar

measures. From a regulatorycompliance standpoint, it does not

create significant new compliancehurdles for companies and other

entities because the list simply needs tobe added to existing screening

processes. Could there be similar lists

in the future?The political and foreign policy

equities that gave rise to the Magnitsky

List are unique. It is not easy to movelegislative product through our system;

however, if the correct legal and public

policy elements are present, it can bedone. The world is a great deal more

interconnected these days.Partisanship and ideological disagree-

ments seem to melt away when itcomes to human rights issues. These

turn to the leaders, that is, thechairman and ranking member, of the

foreign affairs committees of either the

House or Senate to request from thePresident whether such a person

meets the criteria for being added tothe list. The required response from

the President provides the Congressgreater insight on the deliberations and

range of factors being considered whenimplementing the Magnitsky law.

In mid-April, the Treasury

Department is expected to publishimplementing regulations providing

further guidance to financial

institutions.13 This information will beespecially useful for corporations and

financial institutions needing to update

compliance policies and procedures.

Shaping the future?While the Magnitsky law has caused a

great deal of consternation inside ofRussia that has led to, among other

Jason I. Poblete is an attorney atPoblete Tamargo LLP, a boutique

federal regulatory law andpublic policy practice with offices

in Washington, DC and Miami,Florida. The firm specializes in

federal regulatory litigation andtransaction law with a focus on

national security and businesslaw. Poblete worked severalyears in the U.S. Congress and

was recognized as one of 50 ofthe most influential staffers on

Capitol Hill. He is currently theVice-Chairman of the National

Security Committee of theAmerican Bar Association

Section of International Law

(ABA International). You canlearn more about the firms work

atwww.pobletetamargo.com.

The Magnitsky law ... is popular inDC foreign policy circles and hasstarted to generate interest in

other counties who may adoptsimilar measures.