Designating Wagner Group as a transnational criminal organization is a first step — but there’s more work to do

The Treasury Department recently designated the Kremlin-linked mercenary outfit, the Wagner Group, as a Transnational Criminal Organization (TCO). The announcement was met with fanfare — and rightly so. The Wagner Group is a notorious private military company with a brutal human rights record, not only in Ukraine but also in Syria, the Central African Republic, Libya and Mali.

Even before the conflict in Ukraine shot Wagner into headlines, the mercenary outfit sat at the intersection of multiple U.S. concerns about Russian foreign and defense policy. In 2018, several hundred Wagner mercenaries attacked U.S. forces in Syria. Wagner is also a particularly nasty aspect of Russia’s foreign policy in Africa, where it supports illiberal regimes, conducts widespread human rights abuses, including mass killings of civilians, and smuggles or exploits gold, diamonds and timber. 

Wagner’s involvement in the war in Ukraine elevated Washington’s concerns, as the “private military company” became a cornerstone of the Russian war effort and its membership swelled, mostly through recruiting from Russia’s penal colonies.

Designating the Wagner Group a TCO has several implications. First, the designation will, as NSC communications coordinator John Kirby noted, “put more squeeze on their ability to do business around the world.” The Transnational Criminal Sanctions program enables the Treasury to freeze Wagner assets in the U.S. and bans U.S. citizens or entities from providing financial or material support to the organization under penalty of steep fines and jail time. Some of these consequences were already in effect, but a formal TCO designation will make it even more difficult for Wagner to conduct business. The Biden administration has not yet announced some of the practical aspects of this designation, but it has promised an expanded sanctions package.

Secondly, and more consequentially, the designation is a sign of growing commitment from Washington to confront Wagner’s generalissimo, Yevgeny Prigozhin, a Russian oligarch who is a confidant of Vladimir Putin. For several years, the U.S. government slowly escalated attempts to go after Wagner’s revenue, leadership and affiliated companies. In June 2017, Treasury added Wagner to the Specially Designated National (SDN) list for its involvement in the Ukraine conflict over Crimea, blocking U.S. residents from conducting business with the Wagner Group. Putin’s Feb. 24, 2022, invasion of Ukraine breathed new life into anti-Wagner efforts: The U.S. recently sanctioned Wagner-linked entities for their involvement in smuggling Iran’s Shahed drones for Russia to use in Ukraine. 

The harshest sanctions have been aimed squarely at Prigozhin. As early as 2016, the U.S. government slapped sanctions on Prigozhin for his involvement in Russia’s annexation of Crimea in 2014. Treasury’s Office of Foreign Assets Control (OFAC) hit Prigozhin and his associates with additional sanctions in 2019, and twice in 2020, for everything from interference in U.S. elections to influence-peddling in the Central African Republic. After Russia’s invasion of Ukraine, the Treasury began looking for more avenues to sanction Prigozhin and members of his family.

Sanctions have become an increasingly popular foreign policy tool. Nowhere is this more evident than the battery of sanctions levied against Russia since its invasion of Ukraine — including sanction packages targeting Wagner. While the threat of severe sanctions failed to deter Russia, several expected the sweeping sanctions implemented after the invasion would compel the Kremlin to cease its war efforts — or at the very least, push them to negotiate. So far, while sanctions clearly have impacted the Russian economy, they have yet to lead to the desired outcome of forcing the Kremlin’s hand.

To work, sanctions take time — and even time is no guarantee of success. In fact, research on sanctions shows that, at best, they “work” 40 percent of the time. Sanctions also need to be constantly updated to close loopholes and include newly-identified individuals or entities. In general, sanctions also work best when they are multilateral. Even though their success rate may appear underwhelming, the absence of robust sanctions packages allows targeted actors to operate with impunity.

In the case of sanctions against Wagner, the TCO designation is a label that requires a formal delisting. In other words, the designation ensures that Wagner remains a sanctions target and closes loopholes and eliminates any ambiguity about the way the U.S. perceives the group. The biggest impact likely will be felt by Wagner’s associates and facilitators, who are vulnerable to losing U.S. business and having their assets seized if they continue to work with the mercenary outfit. 

Although designating the Wagner Group as a TCO is an important step in the efforts to counter its activities, there is still a lot more work ahead for the Biden administration as it works to degrade their global influence and operations. Experts on Wagner have called for also designating the paramilitary organization a Foreign Terrorist Organization (FTO) via the State Department. Practically, there are quite a few similarities between the designations. A terrorist designation would also freeze Wagner assets in the U.S., impose travel restrictions, and set legal consequences for those caught supporting a designee. The Biden administration has made no commitments to designate Wagner as such, but it likely would restrict the list of potential Wagner clients and demonstrate commitment to pursuing justice.  

Alphabet soup designations aside, the primary challenge for President Biden is getting other countries on board with stopping Wagner. The U.S. simply cannot stop Wagner alone, which is why the TCO designation included a plea that other countries join in the sanctions regime. From intelligence sharing to international legal action, the value of multilateralism when dealing with a global organization such as the Wagner Group cannot be overstated.

The U.S. won’t need to look far for like-minded partners. Wagner’s current and former host countries, such as Sudan and Syria, are unlikely to cooperate with Washington, but several European and African countries have a bone to pick with Wagner themselves. The UK Parliament is conducting an inquiry into Wagner and the European Union has levied their own set of sanctions on the group. In Africa, Chad and Libya’s Tripoli-based government are critical of Wagner’s actions within or near their borders.

Ultimately, the Biden administration can make as many designations as it wants, but it will need to be flexible enough to work with allies and partners in order to topple Prigozhin’s criminal empire for good.

Christopher M. Faulkner is an assistant professor of National Security Affairs in the College of Distance Education at the U.S. Naval War College. The views expressed are the author’s own and do not represent the Department of the Navy, Department of Defense, or the U.S. Government. Follow him on Twitter @C_Faulkner_UCF.

Marcel Plichta is a former Department of Defense analyst and Ph.D. candidate at the University of St. Andrews. He recently submitted evidence to the UK Parliamentary Inquiry into the Wagner Group. Follow him on Twitter @plichta_marcel.