Planes, Trains, Automobiles, and Yachts: DOJ, Treasury, and International Partners Pursue Asset Seizures, Sanctions, and Criminal Prosecutions – Export Controls and Trade and Investment Sanctions

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Last March, the DOJ launched Task Force KleptoCapture and, with the Treasury Department, announced a multilateral partnership to identify and seize the assets of sanctioned individuals and companies around the world. The past few weeks have shown these initiatives in action.

Seizures of assets

On April 4, Task Force KleptoCapture got the green light to make its first international seizure. In a decision that could provide a legal framework for the KleptoCapture task force, a federal justice of the peace in DC has signed a seizure order for the $90 million, 255-foot yacht of sanctioned Russian oligarch Viktor Vekselberg located in the Balearic Islands in Spain. The seizure warrant detailed Vekselberg and his associates’ use of shell companies to transfer US dollar payments through US banks to support and maintain the yacht. The order explained the basis of the jurisdiction of the United States to seize the property and the place of issuance of the warrant of seizure in the District of Columbia. The order further explained that the U.S. government did not need a search warrant to search documents, electronic devices and items located on the yacht, as the Fourth Amendment does not apply to property belonging to a non-resident alien located in a foreign country. Finally, he held that confiscating the yacht would not violate the excessive fines clause of the Eighth Amendment.

Meanwhile, European authorities have acted aggressively on asset seizures. For example, the Dutch Ministry of Finance froze more than $428 million in transactions and deposits in March. Italian law enforcement seized physical assets, including at least three yachts and villas worth more than $863 million. German law enforcement seized at least one mega yacht. Spanish law enforcement seized at least three luxury yachts linked to sanctioned individuals. Switzerland has frozen $6.2 billion in bank accounts. French law enforcement seized at least one yacht, a freighter and around 33 homes, including a $120 million mansion on the French Riviera and a dozen other French properties belonging to Russian oligarch Roman Abramovich. The French Ministry of Culture also seized two Russian paintings that were recently exhibited at the Louis Vuitton Foundation in Paris: one piece is on loan from a Russian museum but ultimately belongs to a sanctioned Russian oligarch, and the other piece belongs to the museum. Fine Arts of Dnipro in Ukraine. and was seized at the request of the Ukrainian authorities. In addition, Belgium froze nearly $2.9 billion in bank accounts and $7.8 billion in transactions.

These seizures frequently involve not only the sanctioned persons and entities, but also various third parties who may have interests in the assets.

FinCEN Council

On April 14, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an advisory on kleptocracy and public corruption overseas, “urge[ing] financial institutions to focus their efforts on detecting the proceeds of foreign public corruption, a priority for the US government. FinCEN observed that “Russia’s actions in Ukraine are supported and enabled by Russian elites and oligarchs who control the majority of Russia’s economic interests.” . . [and who] are suspected of directly funding off-budget projects that include malign political influence operations and armed interventions abroad. funds” and the purchase of real estate, luxury goods, and other high-value assets. FinCEN also reminded financial institutions of relevant Bank Secrecy Act (BSA) obligations and tools, such as Suspicious Activity Reports (SARs), due diligence on foreign senior officials, political figures, private bank accounts held for non-U.S. persons, correspondent accounts, and information sharing under Section 314 (b) the USA PATRIOT Act.

New Sanctions Designations and Prosecutions for Sanctions Evasion

On April 20, the Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned several individuals and entities “involved in attempts to evade sanctions imposed by the United States and its international partners on Russia.” OFAC announced that the list includes the first-ever designation of a virtual currency mining company (BitRiver), a Russian bank (Public Joint Stock Company Transkapitalbank), and Russian oligarch Konstantin Malofeyev, among others.

Earlier this month, the DOJ announced the unsealing of Malofeyey on charges of conspiracy to violate and violation of US sanctions originally imposed on him in 2014 following the invasion of eastern Israel. Ukraine by Russia. Malofeyey is accused of illegally hiring a US citizen to work for his television network in Russia and transferring a $10 million investment to a US bank.

For more on the “drastic sanctions, export restrictions and economic countermeasures” related to Russia that the United States has imposed over the past two months, please refer to Arnold’s coverage & Carry here; for more on the DOJ’s investigations into cryptocurrency misuse, check out our coverage here; and for more compliance information, please feel free to contact the authors or our Trade Sanctions team, including John Barker, Soo-Mi Rhee and Tal Machnes.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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