Washington, D.C. (July 7, 2023) – In June 2023, the Canadian government seized an Antonov An-124, which it alleges is owned by a subsidiary of Volga-Dnepr Airlines LLC and Volga-Dnepr Group. Canada joins the United States in actually having within its physical control assets connected to individuals and entities allegedly profiting from Russia's invasion of Ukraine. See Lewis Brisbois' Alert dated June 17, 2022. This action represents Canada's first physical asset seizure under the June 2022 amendments to Canada's Special Economic Measures Act.

Canada's Action Reflects Heightened International Efforts Against Russian-Connected Aircraft

Canada and the United States are part of the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, which consists of the finance and justice ministries in each member nation. The REPO Task Force is focused on further cooperation in asset freezing and civil and criminal asset forfeiture. As of March 9, 2023, these governments have seized, begun forfeiture proceedings, or blocked more than $58 billion worth of assets.

The United States Department of Justice (DOJ) has obtained forfeiture warrants against several high-profile foreign-based aircrafts owned by Russian companies and individuals. For example, in February, DOJ obtained a forfeiture warrant for a Boeing 737–7JU aircraft owned by PJSC Rosneft Oil Company (Rosneft), a Russian state-owned energy company headquartered in Moscow and headed by Igor Ivanovich Sechin. See Lewis Brisbois' Alert dated March 13, 2023. Both Rosneft and Igor Ivanovich Sechin appear on the Office of Foreign Asset Control's (OFAC) Specially Designated Nationals and Blocked Persons list (SDN List).

In addition, last year, DOJ obtained a seizure warrant for a $25 million Boeing 737-7JU owned by Russian oligarch and Duma member Andrei Skoch. DOJ also obtained a seizure warrant for two luxury aircrafts owned by Roman Abramovich valued at over $400 million. See Lewis Brisbois' Alert dated August 5, 2022.

Canada's Seizure of Volga-Dnepr Airlines Constitutes a Significant Ratcheting-Up of Canadian Actions Against Russia

The Volga-Dnepr Airlines' An-124 has been stranded at Toronto's airport since February 27, 2022. As a result of Russia's invasion of Ukraine, Canada imposed sanctions against Volga-Dnepr Airlines and the Volga-Dnepr Group. Canada's foreign ministry stated, "By authorizing the seizure of the Antonov 124, Canada reaffirms that impunity is not an option for those who have profited from Russia's illegal war in Ukraine." Similar to the United States permitting proceeds from the sale of Russian oligarchs' forfeited assets to be used for aid to Ukraine, the Canadian government likewise plans to send either the airplane or the proceeds of its sale to the Ukrainian government. After the Canadian government's action, the Russian foreign ministry warned relations with Canada were "on the verge of being severed" and said the move "amounts to an attempt at undisguised robbery."

Experts consider the An-124 an essential military transport aircraft as one of the world's largest commercially developed freighters. Volga-Dnepr is a Russian-based cargo airline based in Ulyanovsk, Russia. NATO contracted with the airline to provide strategic airlift services to NATO missions in Iraq and Afghanistan. In 2007, the United Nations debarred Volga-Dnepr for bribery of UN officials and money laundering.

Conclusion

Canada's actual physical seizure of an aircraft represents a significant enforcement step exemplifying the potential global reach of Western sanctions in the wake of Russia's conflict with Ukraine. Volga-Dnepr Airlines currently has three other Antonov An-124 freighters stuck at Leipzig Halle Airport in Germany, which portends future action as Germany also is part of the multinational REPO Task Force.

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