When Putin invaded Ukraine in late February 2022, President Biden announced sanctions targeting Russian banks, the country’s sovereign debt and Russian oligarchs, warning that Russia would pay an even steeper price if it did not cease its aggression. In the early days of the conflict, European banks braced for the fallout. However, U.S. bank executives believe the industry will remain somewhat insulated from major disruption, having disengaged with the Russian financial sector in recent years.
In fact, real estate represents one of the weakest links within Russia’s kleptocratic system. Even members of Putin’s wealthy inner circle are not allowed to own property in the country, so they are heavily invested in real estate abroad — largely in the West, and largely laundered through offshore havens in the United States and United Kingdom. This is because they are the two major economies that permit anonymous company ownership.
When you see the hoops that oligarchs must jump through to retain millions in assets, it is a lesson for us in two ways. First, because the investment markets, real estate markets and global geopolitical conflicts are ever present and unpredictable, it is important to maintain allocations of both liquid and guaranteed assets. The second reminder is that as Americans, we are fortunate to have such a strong and reliable banking system, long-standing financial institutions and a stringent supervisory system — by both government and business self-regulatory agencies.
As we watch the wealthiest among one of the world’s most powerful countries scramble to access their assets, remember that ours is a privilege we must never take for granted. If you would like to review the disposition of your assets and consider ways to make them more secure and accessible, please feel free to contact us.