Has Putin perverted Interpol?
Wednesday, March 25, 2015 at 7:18AM
Richard L. Cassin in Ilya Katsnelson, Interpol, Mikhail Khodorkovsky, North Korea, Red Notice, Russia, Sergei Magnitsky, Ted Bromund, William Browder, Yukos, money laundering

Red Notices from Interpol's website (click to enlarge)Interpol -- the International Criminal Police Organization -- isn't a police force. It's an information clearing house that promotes international police cooperation.

The neutrality of Interpol is supposedly guaranteed by Article 3 of its constitution. It explicitly forbids Interpol "from engaging in matters of political, military, religious, and racial character."

"In other words," said Ted Bromund, writing in the Weekly Standard, "it’s supposed to pursue only ordinary crimes."

Interpol members (all countries except North Korea) have the right to request a “Red Notice,” asking other members to detain and extradite a wanted individual.

In 2013, Interpol issued 8,857 Red Notices. "At that rate," Bromund said, "it’s impossible for Interpol to be sure that it’s only pursuing murderers, child molesters, rapists, and the like. It has to trust its member nations."

Interpol grants most Red Notice requests in hours. "All you have to do is assert that a valid warrant exists. In Russia, this is a mere formality," Bromund said.

Countries that request Red Notices can make them visible on Interpol’s site. Banks doing business in the United States and other countries have know-your-client requirements. KYC due diligence requires checking Red Notices. Banks nearly always block business from anyone subject to a Red Notice.

Bromund said,

The irony is that the due diligence firms are seeing the abusive Red Notices that Russia, and other nations that use Interpol for political purposes, want everyone to see: This is an instance where openness, perversely, is part of the problem.

A further irony is that the international system of know-your-customer requirements, created to stop money laundering, is now being used by Russia to punish the victims of the regime’s thievery. What is not ironic is that the effects of being the subject of an abusive Red Notice, thanks to the way the notice reverberates through the financial system, are far more wide-ranging than merely preventing the victim from traveling without risking extradition to Russia.

The banks and due diligence firms are just doing their KYC jobs, Bromund said, trying to identify potential money-laundering risks and respond to them. But when an individual subject to a Red Notice is effectively barred from the U.S. banking system, the result can be financially catastrophic. And appealing a Red Notice through Interpol is slow and cumbersome.

Russia has requested a Red Notice against at least one U.S. citizen, Ilya Katsnelson. He was arrested in Germany in 2008. Russia's action was "part of [the] politically motivated vendetta against Mikhail Khodorkovsky’s Yukos oil company," Bromund said.

Katsnelson was held for two months in a German maximum security prison. In the United States, his problems were just starting.

His account at Citibank was closed in late 2007 -- his investment banker told him privately this was because of his “problems with the Russians” -- his assets sold at considerable loss, and a cashier’s check sent to his attorney. Even today, his Red Notice asserts that he is wanted for fraud and money laundering.

Other former Yukos executives were victimized in the same way, Bromund said.

Russia requested three Red Notices against Bill Browder, the American-born head of London-based Hermitage Capital Management. Browder has led a global campaign for sanctions against those responsible for the death of Sergei Magnitsky, Hermitage's Russian lawyer. Magnitsky died under suspicious circumstances in a Moscow prison after uncovering a massive tax fraud.

Browder has written a bestseller, Red Notice, about his struggle against Putin's government.

Whether the Russian government set out to abuse Red Notices isn't clear. But the Russians must now understand the outcome, a former DOJ official told Bromund.

"The frightening thing about all of this is that it could happen to anyone Russia takes a dislike to," Bromund said.

"When it happens, the U.S. government won’t stick up for you, Interpol’s processes are slow at best and useless at worst, and the Russians won’t relent."

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"Putin’s Long Arm: How Russia uses Interpol to harass opponents" by Ted Bromund in the March 2, 2015 edition of the Weekly Standard is here.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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