DOJ Announces New Russia-Focused AML and Sanctions Enforcement Initiative
On March 2, 2022, Attorney General Merrick B. Garland announced the launch of Task Force Kleptocapture, (the "Task Force") an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with allies and partners, in response to Russia’s military invasion of Ukraine.
While the Russian invasion of Ukraine undoubtedly spurred the Task Force’s creation, the initiative is emblematic of broader trends in DOJ enforcement, and there are several key takeaways, particularly for businesses involved in international commerce and entities subject to the Bank Secrecy Act, including not only banks but also, for example, "broker[s] or dealer[s] in securities or commodities," registered futures commission merchants, investment companies, and insurance companies.1
According to the Justice Department’s announcement, the Task Force aims to freeze and seize the assets of individuals bolstering the Russian regime through corruption and sanctions evasion. As part of its mission, the Task Force will:
- Investigate and prosecute new and future sanctions imposed in response to the Ukraine invasion, as well as sanctions imposed following prior instances of Russian aggression and corruption;
- Combat unlawful efforts to undermine restrictions taken against Russian financial institutions, including prosecuting those who try to evade know-your-customer and anti-money laundering measures;
- Target efforts to use cryptocurrency to evade U.S. sanctions, launder proceeds of foreign corruption, or evade U.S. responses to Russian military aggression; and
- Use civil and criminal asset forfeiture authorities to seize assets belonging to sanctioned individuals or assets identified as the proceeds of unlawful conduct.
In a sign that this initiative will be a key priority for DOJ, the Task Force will be run directly out of the Office of the Deputy Attorney General and staffed with prosecutors, agents, analysts, and professional staff from across DOJ and several law enforcement agencies. The Task Force will be led by Andrew Adams, a long-time prosecutor in the U.S. Attorney’s Office for the Southern District of New York, who previously investigated Russian organized crime and headed the Office’s Asset Forfeiture Unit. The Southern District U.S. Attorney’s Office has had particular experience in a number of high-profile sanctions and export control prosecutions in recent years, including the prosecution of Halkbank for participating in transactions designed to extract Iran’s oil and gas proceeds to make payments through the U.S. financial system. Indeed, the day after AG Garland’s announcement, on March 3, the Southern District announced "the unsealing of the first-ever criminal indictment charging a violation of United States sanctions arising from the 2014 Russian undermining of democratic processes and institutions in Ukraine."2
DOJ’s announcement also emphasized that the Task Force is authorized to investigate and prosecute any criminal offense related to its mission and that it will use asset seizures and civil forfeitures of unlawful proceeds, including personal real estate, financial, and commercial assets, to deny resources that purportedly enable Russian aggression. The Task Force can also share information from its investigations with interagency and foreign partners to augment the identification of assets covered by the sanctions and new economic countermeasures.
The actions taken by the Task Force will be in addition to the existing asset blocking requirements maintained by the Treasury Department’s Office of Foreign Assets Control through the sanctions imposed on Russian enterprises and individuals, as well as civil enforcement of export control restrictions on Russia by the Commerce Department’s Bureau of Industry and Security.
While the creation of the Task Force is explicitly a response to Russia’s invasion of Ukraine, the initiative is emblematic of broader trends in DOJ enforcement and there are several key takeaways:
- This once again highlights the DOJ’s continued focus on anti-money laundering and sanctions enforcement as key, "main effort" pieces of its enforcement program. As a result, entities engaged in international business need to keep in mind that anti-bribery/FCPA programs cannot be the sole (or even predominant, depending on the company’s risk profile) focus of a compliance program. In particular, business should consider whether their AML, sanctions, export controls and “know your customer” programs are tailored to the current enforcement environment.
- In recent years, DOJ (and the Treasury) have received more tools for investigating money laundering and other international financial crimes. We expect the Task Force, and the DOJ more broadly, to use these tools frequently in the coming months and years. For example, the Anti-Money Laundering Act (AMLA) of 2020, which we discussed here, greatly expanded DOJ’s (and Treasury’s) subpoena power to obtain foreign bank records. Previously, the government could obtain records only from correspondent accounts located in the United States and these records had to be "relat[ed] to the deposit of funds into the foreign bank." AMLA broadened this authority to allow the government to obtain records of the correspondent account “or any account at the foreign bank, including records maintained outside the United States” that are the subject of “any investigation of a violation of a criminal law of the United States,” of Subchapter II of the BSA, of a civil forfeiture action, or certain administrative investigations.3 Moreover, the recipient of such a subpoena cannot use a foreign blocking statutes or data privacy laws as the “the sole basis for quashing or modifying the subpoena.”4
- Further, the announcement regarding the Task Force’s planned use of DOJ’s civil forfeiture authority is also notable. The government has civil forfeiture authority to seize "any property . . . involved in a transaction or attempted transaction of violating "statutes prohibiting money laundering or unlicensed money transmitting.5 This is comparatively boarder than the government’s authority to seize property connected to other, non-money laundering offenses, which is generally limited to “proceeds” or “receipts” “traceable” to the actual offense.6 Moreover, the government can obtain a civil seizure warrant based on an ex parte showing of probable cause, a lesser standard than preponderance of the evidence or beyond a reasonable doubt.
- At the same time, it bears noting that the Russia-focused task force was created just weeks after the DOJ announced it was ending its "China Initiative," which it had created in 2018 to focus on China-related prosecutions. In announcing the program was ending, the Head of the DOJ’s National Security Division noted "concerns from the civil rights community that the ‘China Initiative’ fueled a narrative of intolerance and bias" and “increasing concerns from the academic and scientific community about the department’s pursuit of certain research grant fraud cases,” and acknowledged “that [DOJ] helped give rise to a harmful perception that the department applies a lower standard to investigate and prosecute criminal conduct related to that country or that we in some way view people with racial, ethnic or familial ties to China differently."7 While there are obvious geo-political differences between the current situation involving Russia and the situation involving China, it will still be important for the Department to ensure that it does not create a "harmful perception," whether through the Task Force or more broadly, of a “lower standard to investigate and prosecute criminal conduct" of individuals with ties to Russia, regardless of those individuals’ involvement in the current geo-political crisis.
1 See 31 U.S.C. § 5312.
2 TV Producer For Russian Oligarch Charged With Violating Crimea-Related Sanctions | USAO-SDNY | Department of Justice. (emphasis added)
3 See 31 U.S.C. § 5318(k).
5 See 18 U.S.C. § 9814. Id.(a)(1)(A).
6 See 18 U.S.C. § 981((a)(1)(B)-(E).
7 See Assistant Attorney General Matthew Olsen Delivers Remarks on Countering Nation-State Threats, https://www.justice.gov/opa/speech/assistant-attorney-general-matthew-olsen-delivers-remarks-countering-nation-state-threats (Feb. 23, 2022).
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