Planes, Trains, and Automobiles: DOJ Launches Task Force KleptoCapture to Pursue Sanctions, Export Control, AML, and Other Violations Related to Russia
In his State of the Union Address last week, President Biden announced that “the US Department of Justice is assembling a dedicated task force to go after the crimes of Russian oligarchs. We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets. We are coming for your ill-gotten gains.”
The next day, on March 2, 2022, Attorney General Merrick Garland publicly launched “Task Force KleptoCapture” to enforce “the sweeping sanctions, export restrictions, and economic countermeasures that the United States and its allies have imposed in response to Russia’s unprovoked military invasion of Ukraine.” This interagency task force, which will operate out of Deputy Attorney General’s Office, seeks to “leverage all the Department’s tools and authorities” to target the crimes of Russian officials, government-aligned elites and oligarchs, and those who aid or conceal their unlawful conduct.
According to the department, those “tools and authorities” will include data analytics, cryptocurrency tracing, foreign intelligence sources, and information from financial regulators and private sector partners to detect sanctions evasion and related criminal misconduct. One focus will be those who try to evade know-your-customer and anti-money laundering measures.
One goal, of course, will be criminal charges, such as conspiracy to defraud the United States by interfering in and obstructing lawful government functions; money laundering; false statements to a financial institution; bank fraud; and various tax offenses. But the department also made clear that the task force plans to rely heavily on civil and criminal forfeiture to seize the assets of sanctioned individuals and the proceeds of unlawful conduct.
A number of interesting questions arise out of this announcement:
- Will the department be focusing only on conduct in violation of the new sanctions? Or will this be a broader effort to pursue those Russian oligarchs and others who have been operating both openly and in the shadows for years?
- Will the Task Force take immediate action to enforce the sanctions and export control measures rolled out in recent weeks or will it allow time for individuals and businesses to acclimate and use available general licenses to unwind?
- Will the department have difficulty proving criminal intent to violate the new sanctions in a rapidly changing regulatory landscape?
- Will other countries truly cooperate with US investigations, especially when sensitive banking and beneficial ownership information is at issue?
- What will be the role of the Treasury Department’s Office of Foreign Assets Control (OFAC), which has civil enforcement authority for sanctions violations?
- Will the increased scrutiny of sanctions targets inevitably uncover other misconduct?
- How will the work of the new Task Force differ from the Kleptocracy Asset Recovery Initiative that DOJ established back in 2010?
In the near term, we expect to see the Justice Department make greater use of investigative tools, including its recently expanded authority under the Anti-Money Laundering Act of 2020 to subpoena foreign bank records; Bank of Nova Scotia subpoenas that can be served on branches of banks and business in the United States for records located abroad; and civil seizure warrants. We also expect to see more interagency coordination, with the Justice Department drawing on leads from the intelligence community—something that already should be in the works pursuant to the US Strategy on Countering Corruption the White House announced last year. With international support waxing (including from previous holdouts, such as Switzerland), the likelihood of asset recoveries may increase significantly.
Of course, notwithstanding the urgency of the moment, new investigations of new subjects based on violations of new sanctions will take time, particularly if the evidence of misconduct lies abroad. So, as we watch and wait for the early results, we’re keeping our eyes out for cases that have already been in the works. In the end, of course, it won’t matter whether the heat on Putin’s friends and associates comes from their prosecution based on their new crimes or their old ones. What will matter is a robust demonstration by DOJ that it intends to play a serious and meaningful role in holding Russia to account.
For more on the “sweeping sanctions, export restrictions, and economic countermeasures” that the United States has imposed in recent weeks, please refer to Arnold & Porter’s coverage here; for more on the Justice Department’s investigations into the misuse of cryptocurrency, see Arnold & Porter’s coverage here; and for more information on compliance, feel free to reach out to the authors or our Export Control and Sanctions team, including John Barker, Baruch Weiss, Soo-Mi Rhee and Tal Machnes.
© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.