Wealthy Russian oligarchs could escape FAA ban on Russian planes
But while blocking Russian passenger and cargo airlines is straightforward enough, cracking down on private jets owned and registered by trusts and secret societies could be more difficult.
The FAA said in a statement that its own staff and “several federal agencies” are working to enforce airspace restrictions. He declined to say what sources of information he relied on.
The private jets of the oligarchs – with their massive yachts – are one of the most visible signs of their extraordinary wealth. Western government leaders have highlighted the planes as they rolled out increasingly tough sanctions against Russians in recent days.
On Thursday, the White House tweeted a photo of a jet belonging to Alisher Usmanov, one of Russia’s richest men, saying it was “blocked from use in the United States.” The airliner-sized Airbus A340 has a distinctive burgundy livery, and officials said it is one of Russia’s largest private planes.
“Let me be very clear,” European Commission President Ursula von der Leyen said on Sunday, “Our airspace will be closed to all Russian planes – and that includes the private jets of the oligarchs.”
Still, transparency advocates say enforcement efforts will be hampered by the opacity surrounding jet ownership.
Representative Stephen F. Lynch (D-Mass.) says the FAA’s aircraft registration system is flawed and undermines the country’s ability to monitor or punish Russian oligarchs and a range of other potential bad actors . He said the FAA has for years been “very insensitive” about making sure the agency knows who is registering and leasing planes in the United States.
Lynch said he agrees with President Biden’s moves to ban Russian flights. “But knowing the state of the law and the administrative shortcomings, I’m less optimistic that it will succeed unless we change the registration process,” Lynch said.
“We can’t tell if they’re Sinaloa or Hezbollah,” Lynch said, citing the Mexican drug cartel and Lebanese militia. “We also cannot say if they are Russian.”
The Aircraft Ownership Transparency Act, a bill first introduced by Lynch in 2017, was intended to address this issue. The FAA would have had to obtain the identity of the “beneficial owners” of an aircraft, i.e. the persons who actually control the entity seeking to register the aircraft, or those who have an interest in its assets. The updated legislation he introduced last year aims to achieve many of the same goals.
Without this basic information, powerful Russians with US-registered planes could continue to use their planes or secretly sell them to finance their way of life, said Gary Kalman, director of the US office of anti-corruption group Transparency International. .
“These sanctions are trying to squeeze oligarchs who are close to Putin,” Kalman said. “We don’t want these oligarchs to be able to fly around the world, especially under the guise of an American flag.”
Kalman said the Corporate Transparency Act, which was passed by Congress and signed into law last year, will require many corporations to send beneficial ownership information to the U.S. Treasury, including for many corporations. used to register aircraft. The rules for applying this law are still being finalized.
Kalman said there are also exemptions to these new requirements, including for certain trusts, that would still allow abuse in aircraft registrations — loopholes that should be closed with legislation such as Lynch’s.
When it comes to yachts, the Coast Guard has not implemented an earlier push for transparency, which could have helped current efforts to track the assets of Russian elites, despite a Congressional delay.
Congress passed “large pleasure craft” regulations in the summer of 2018 that gave the Coast Guard a year to demand information about the true “beneficial owners” of such craft. The Coast Guard said in a statement Friday that it “is in the process of developing the regulations” and “due to the regulatory process, there is no estimated timeframe for issuing a final rule.”
The terms of sanctions and airspace bans are broad. The Department of Transportation said a U.S. order issued this week prohibits flights of “all aircraft owned, certified, operated, registered, chartered, leased, or controlled by, for, or for the benefit of a person who is a Russian citizen. “. ”
A Twitter account, Russian Oligar Jets, has found viral popularity since the start of the war by sharing the movements of alleged oligarch jets. He followed Usmanov’s plane taking off from Munich Monday. Germany closed its airspace to Russians on Sunday afternoon, but German and European aviation authorities did not respond to questions about whether they considered the flight a violation of the ban.
Usmanov could not be reached through the companies he owns.
Yet the account faced the difficulties of conclusively linking individuals to aircraft, removal of some planes he concluded that they were in fact no longer connected to the oligarchs.
Colby Howard, president of Paragon Intel, a consultancy that tracks business aviation, said Russia’s most prominent oligarchs have been reliably linked to their jets, but it’s harder to track. lesser known numbers – “especially when people go out of their way to make sure you can’t figure out who it is.
“You are talking about LLC. You talk about trusts. You’re talking about data that’s never real-time,” Howard said. “None of this is perfect.”
The world’s super-rich have many options for registering their planes. Usmanov’s jet is registered in the Isle of Man, off the coast of Britain. Dale Nickerson, a retired private pilot, said Bermuda was a popular option for Russians. The island’s aviation authority has an office in Moscow and advertises “discreet registration marks”.
But the jets’ registration with the FAA is attractive, offering a coveted tail ‘N’ number – a visible link to the United States that serves as a form of protection around the world. And it allows owners to avoid the heavy value-added taxes imposed by other countries.
The current US registration system, “while offering a world-class reputation” to those who register planes here, “also offers a lot of secrecy” and ultimately invites abuse, said Lakshmi Kumar, director of policy for Global Financial Integrity, a DC-based illicit finance and trade think tank.
“If you are someone who wants to enjoy the benefits of a system that protects your property rights while hiding your identity, why wouldn’t you choose to do so?” Kumar said.
The FAA generally allows US citizens and permanent residents to register aircraft, but foreigners can obtain the services of a US-based trust to do the work on their behalf. The non-citizen is supposed to face limits on their control over the trust, but in a LinkedIn post, a leading aircraft registrar said that in practice the limits do not prevent the true owner from use the aircraft as desired.
The Inspector General of the Department of Transportation raised concerns about the system in 2013 and again in 2014. In 2020 the Government Accountability Office, a congressional watchdog, released a 92-page report stating that the problems persisted. Bureau auditors estimated that there were 3,300 aircraft registered with non-citizen trusts in the United States.
“Without a risk assessment,” the auditors concluded, “the FAA is limited in its ability to prevent fraud and abuse in aircraft registrations, which allows criminal, national security, or security risks related to aircraft “.