The Magnitsky Act, adopted in 2012 to tackle Russian corruption and expanded in 2016 to cover serious human rights abuses globally, is an extremely powerful tool to hold perpetrators accountable.
Managed by the Departments of the Treasury and State, more than 200 individuals and companies have been sanctioned to date. Sanctions include visa denials, asset freezes and the inability to transact in dollars. In November, the newest designees were announced, notably, members of a Libyan militia responsible for mass killings and a Lebanese politician with ties to Hezbollah.
The Magnitsky model has proven appealing. Canada and the U.K. passed similar legislation in 2017 and 2018 respectively, and an EU version is set to take effect in January 2021.
Given the significant ramifications of a Magnitsky designation, it is essential that the U.S. government periodically examine its administration of the law. Despite its noble intent, the law raises several due process issues.
One area of concern is whether designation punishes past activity or prevents ongoing abuses. The Treasury Department’s Office of Foreign Assets Control (OFAC) notes that “The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior.”
However, it seems that some listings are really aimed at punishing past activity, particularly where it proved impossible to carry out a criminal prosecution. If so, where wrongdoing has ceased, the imposition of unlimited and potentially indefinite sanctions could violate due process and other rights. Convicted criminals are able to make restitution by serving their sentences and/or paying fines.
But it is unclear how those who are no longer engaged in wrongdoing will be said to have paid their sanctions “debt.” Regardless of semantics, being blocked from American financial markets and doing business with U.S. entities is a serious punishment indeed, and far more onerous than many criminal penalties.
Another issue is how listed individuals or entities can challenge their designations. While one can petition the OFAC to review the designation, the process is administrative rather than judicial, and the ability to appeal appears limited. The rules also make it difficult for people to defend themselves. For instance, any engaged attorneys have to apply for a license from the OFAC and are subject to relatively small fee caps if they are approved.
There is also no advance notice of a sanctions designation. This policy makes sense in order to maintain an element of surprise and prevent the hiding or off-loading of assets, but this also poses serious issues if the designation is mistaken. Even if the person or entity is eventually delisted, there is little to no remedy for the extensive reputational and economic damage suffered. In many cases, suspicion will continue to surround the sanctions target.
Finally, non-governmental organizations (NGOs), which played an integral role in passing the Magnitsky Act, also play a significant role in the designation process. The Treasury and State Departments largely rely on reports and other information from the NGOs as evidence of wrongdoing – presenting a serious due process problem.
There is little transparency as to which the NGOs are involved, how they interact with government officials and what guidelines govern these relationships.
For instance, at a U.N. Conference in November 2020, an attorney for Human Rights First (HRF) explained that they work with the NGOs to prepare dossiers for submission and that 40% of sanctions designations stem from this network’s recommendations.
At the same event, a U.S. State Department official remarked that the NGOs are encouraged to submit packages to the State Department and to follow the template developed by the HRF.
Yet, it is not clear how or to what extent U.S. officials verify NGO evidence, nor are there international NGO fact-finding standards by which NGO reporting can be measured. It is also unclear as to whether an NGO report alone is sufficient for someone to be designated. After all, there are no evidentiary or burden of proof standards specified in the law.
To be sure, the U.S. official speaking at the U.N. noted that NGO evidence is approached deliberately. But what does this mean? And are listed individuals entitled to see the evidence against them levied by these organizations in order to challenge their cases?
The involvement of outside and non-accountable actors in a mechanism imposing criminal-like penalties, but without the safeguards of criminal procedure, is incompatible with open democracy and makes the process at risk for abuse.
The Magnitsky Act is a powerful and important means to tackle corruption and grave human rights abuses. But like all punitive mechanisms, the government must act with requisite due process and clear regulations. This is all the more so when designations result from close collaboration with outside organizations not subject to the same oversight, transparency and accountability as the government.
To rectify these problems, the Treasury Department should establish clear standards about pre-listing notification, evidentiary procedures and requirements, and the role of the NGOs and other outside actors. Other governments and international institutions seeking to adopt similar mechanisms also need to ensure that due process safeguards are embedded.
• Anne Herzberg is the legal adviser of NGO Monitor, a Jerusalem-based research institute.