Where are Russia’s oligarchs hiding their wealth?

For decades Russian elites have been stashing their money abroad, often to the benefit of the Kremlin. According to the Atlantic Council, president Vladimir Putin and his associates control about one-quarter of the estimated $1 trillion in Russian dark money hidden outside of the country.

Western governments are now trying to crack down on Russian oligarchs over the war in Ukraine — and the US Department of Justice has even set up Task Force KleptoCapture — but doing so may prove tricky due to the opaque nature of their investments.

How Russian oligarchs hide their money

As much as 60% of Russia’s wealth is estimated to exist offshore, according to a 2017 National Bureau of Economic Research paper on tax havens.

In practice, this means the country’s wealthiest citizens often store their investments abroad, through real estate, shell companies, and complex corporate structures that hide their names. So while it may be obvious that a Russian billionaire is using a mansion or yacht, “to prove he or she owns it is harder,” says Josh Kirshenbaum, a fellow at the German Marshall Fund.

The 2016 Panama Papers leak, for example, revealed that Russia’s former deputy prime minister and his wife were using a £37 million jet, even though the couple’s combined wealth was only about £634,000 on paper. It wasn’t listed under their name, but through a Bermudian company of which they were beneficial owners.

If a former Russian official is seeking to embezzle money and move it overseas, “they’re not going to purchase residential or commercial real estate under their actual name,” says Scott Greytak, advocacy director for Transparency International, explaining how an oligarch might come to own property through a shell company. Such practices have allowed Russians to stash their wealth in places like the UK, where around 87,000 properties are estimated to have anonymous ownership.

Can the West go after oligarchs’ assets?

In recent days Western countries including the US, UK, and France, have all unveiled plans to scrutinize Russian assets in their country, and Germany even seized the yacht of sanctioned Russian billionaire Alisher Usmanov on March 2.

Kirshenbaum mostly sees Western pledges to crack down on Russian assets as rhetoric for now. Tracking down and seizing oligarchs’ assets abroad could take years, and even then it’s not certain it would move Putin to end the war in Ukraine. A more effective move might be to target Russia’s political class, a former Kremlin consultant argued, as they actually “draft, rubber-stamp, promote and carry out Putin’s decisions.”

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