During Wednesday’s inaugural meeting, the REPO task force members discussed ways to ensure the effective, coordinated implementation of the group’s collective financial sanctions relating to Russia, as well as the provision of assistance to other nations to locate and freeze assets of sanctioned individuals or entities located within their jurisdictions. Cooperation between the U.S. government and foreign partners has already yielded notable successes. In the last three weeks alone, information provided by U.S. law enforcement to foreign partners has contributed to the restraint of multiple vessels worth hundreds of millions of dollars controlled by sanctioned individuals and entities. The REPO task force also discussed the need to preserve evidence and determine whether frozen assets, or other assets linked to sanctioned individuals or entities, are subject to forfeiture. Finally, the group discussed ways to bring to justice enablers and gatekeepers who have facilitated the movement of sanctioned assets or other illicit funds.
The Department of Justice’s (DOJ’s) newly launched KleptoCapture task force, which Attorney General Garland established on March 2, 2022, will help support this international effort. As we discussed previously, the DOJ is devoting significant prosecutorial and law enforcement resources to the KleptoCapture task force to hunt for sanctions violators and identify related criminal conduct. Deputy Attorney General Lisa Monaco, who is overseeing the task force, said in a statement, “Oligarchs be warned: we will use every tool to freeze and seize your criminal proceeds.” The DOJ has indicated that the KleptoCapture task force will use the most cutting-edge investigative techniques ‒ including data analytics, cryptocurrency tracing, foreign intelligence sources, and information from financial regulators and private sector partners ‒ to identify sanctions evasion and related criminal misconduct. As part of its mission, the KleptoCapture task force will seek to (i) investigate and prosecute violations of current and future sanctions imposed in response to Russia’s invasion of Ukraine, as well as sanctions imposed for prior instances of Russian aggression and corruption; (ii) combat unlawful efforts to undermine restrictions taken against Russian financial institutions, including the prosecution of those who try to evade know-your-customer and anti-money laundering measures; (iii) target efforts to use cryptocurrency to evade sanctions or launder proceeds of foreign corruption; and (iv) seize assets belonging to sanctioned kleptocrats or assets identified as the proceeds of illicit conduct.
In addition to the launch of the REPO task force, the Department of Treasury also launched the Kleptocracy Asset Recovery Rewards Program (the KARR Program), which offers reward payments for information leading to the seizure, restraint, or forfeiture of assets linked to foreign government corruption. Congress established the KARR Program to further the U.S. government’s commitment to combating foreign government corruption and to serve the United States’ efforts to identify and recover stolen assets, forfeit proceeds of corruption, and, where appropriate and feasible, return those stolen assets or proceeds to the country harmed by the acts of corruption.
Finally, the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) announced yesterday its efforts to support the REPO task force and the Treasury’s efforts to boost cooperation and intelligence sharing. In particular, FinCEN joined the financial intelligence units (FIUs) of Australia, Canada, France, Germany, Italy, Japan, New Zealand, the UK, and the Netherlands in issuing a statement of intent to form an FIU Working Group on Russia-Related Illicit Finance and Sanctions. The FIUs affirmed the need to, among other things, identify concrete actions that participating working group members can take to enhance and increase financial intelligence sharing on sanctions-related matters, as well as to strengthen and facilitate working relationships between FIUs and public authorities and the private sector to address the threat caused by Russia’s invasion of Ukraine, including by engaging with the REPO task force. FinCEN also issued an alert for financial institutions highlighting the importance of identifying and reporting suspicious transactions by sanctioned Russian elites, oligarchs, and their proxies that involve real estate, luxury goods, and high-value assets. The alert provides select red flags to assist financial institutions in identifying suspicious transactions and reminds financial institutions of their Bank Secrecy Act reporting obligations. FinCEN issued a similar alert on March 7, 2022, advising all financial institutions to be vigilant against potential efforts to evade the sweeping sanctions and other U.S.-imposed restrictions implemented in response to Russia’s invasion of Ukraine. FinCEN also encouraged financial institutions, particularly those with visibility into cryptocurrency or convertible virtual currency flows, to identify and report suspicious activity associated with potential sanctions evasion quickly and to conduct appropriate, risk-based customer due diligence where required.
All of these efforts suggest very robust enforcement activities to come. This level of focus and cooperation between U.S. enforcers and regulators and their foreign partners is unprecedented. In addition, the KARR Program’s offer of financial rewards may generate additional investigative leads for the KleptoCapture task force. Businesses and financial institutions should ensure that they maintain and enhance compliance programs to adequately monitor risks and curtail illegal conduct.
In-Depth 2022-086
