DOJ’s ‘KleptoCapture’ Unit Will Target Russian Oligarchs

(Bloomberg) -- The Justice Department announced details of a new inter-agency task force designed to enforce sanctions and export restrictions and to seize luxury assets belonging to Russia's wealthiest citizens as the U.S. and its allies step up pressure over the invasion of Ukraine.

The “KleptoCapture” task force will gather experts in sanctions and export control enforcement, anti-corruption, asset forfeiture, anti-money laundering, tax enforcement, national security investigations, and foreign evidence collection, DOJ said in a statement on Wednesday. It will be led by a veteran corruption prosecutor from the U.S. Attorney's Office for the Southern District of New York.

“What we're doing with this task force is to send a very clear and unmistakable message to those who seek to use corruptly gathered money and who seek to evade sanctions: that we're coming for you,” Deputy Attorney General Lisa Monaco said in an interview with Emily Chang on “Bloomberg Technology.” “We're coming for your yacht. We're coming for your jet. We're coming for your ledger. That's the key message.”

The group's creation is the latest sign of how the U.S. and its allies are seeking to isolate Russia from the international financial system as President Vladimir Putin's military presses forward in its war on Ukraine. President Joe Biden announced the task force during his State of the Union address on Tuesday.

Amid international outrage over the war, pressure has been rising to seize the superyachts, jets, properties and other luxury assets of Russian oligarchs who are seen as lending support to Putin.

“We will leave no stone unturned in our efforts to investigate, arrest, and prosecute those whose criminal acts enable the Russian government to continue this unjust war,” Attorney General Merrick Garland said. “Let me be clear: If you violate our laws, we will hold you accountable.”

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Along with prosecuting sanctions violations and efforts to undermine restrictions against Russian banks, the task force will target “efforts to use cryptocurrency to evade U.S. sanctions, launder proceeds of foreign corruption or evade U.S. responses to Russian military aggression,” according to the statement.

The way the task force is organized means it's likely to benefit from increased support from U.S. intelligence agencies and cooperation from other countries that have pledged to counter Russia's aggression, said Drew Hruska, a former Justice Department official and federal prosecutor.

“This appears to be a paradigm shift for law enforcement,” said Hruska, who's now a partner at the law firm King & Spalding LLP.

Hidden Assets

Challenges for the task force, however, include finding hidden assets and some legal limitations that other countries have when it comes to sharing information, he said.

“People tend to know where large ships and large airplanes are,” Hruska said. “The more difficult question will be what the U.S. and its allies will do to identify and deal with previously unidentified assets.

A group of Democratic U.S. senators, including Elizabeth Warren and Mark Warner, called on the Treasury Department Wednesday to provide more information on steps it's taking to enforce sanctions compliance by the cryptocurrency industry.

“Strong enforcement of sanctions compliance in the cryptocurrency industry is critical given that digital assets, which allow entities to bypass the traditional financial system, may increasingly be used as a tool for sanctions evasion,” the senators wrote.

There were some early signs that the global sanctions crackdown was having an impact on Russia's wealthiest, many of whom are seen as backing Putin's rule. A growing number of superyachts belonging to Russian tycoons have made their way to the Indian Ocean, cruising around the Maldives and Seychelles.

In the U.K., Russian billionaire Roman Abramovich is selling his London properties, according to British MP Chris Bryant, and a Swiss billionaire said he's been approached about buying Abramovich's Chelsea Football Club. Ambramovich isn't on the U.K.'s sanctions list but has been under increasing pressure from the nation's politicians.

The U.S. didn't identify by name who will head the new task force, but it will include agents and analysts from other law enforcement agencies, including the FBI, U.S. Marshals Service, U.S. Secret Service, Department of Homeland Security and the Internal Revenue Service.

According to the department, the task force also will:

Investigate and prosecute violations of new and future sanctions, as well as those imposed for prior instances of Russian aggression and corruption.
Combat unlawful efforts to undermine restrictions taken against Russian financial institutions, including the prosecution of those who try to evade customer requirements and anti-money laundering measures.