Since the U.S. levied sanctions against Russian oligarchs last spring in response to Russia's invasion of Ukraine, Russia's wealthiest have gone to great lengths around the globe to hide their wealth. So, too, have U.S. prosecutors in pursuit of would-be sanctions evaders.
The U.S. has moved to seize more than $1 billion of illicit assets since the start of the war. But how does the American government seize personal property in foreign countries?
"We've grounded planes in Switzerland and the Middle East. We've arrested smugglers in Italy, in Germany, in Latvia. And we've charged money launderers in the U.K. So basically, what we've shown is there's no place to hide," U.S. Deputy Attorney General
Monaco's office runs the KleptoCapture task force, a unit launched last March to enforce sanctions on Russian oligarchs and find their hidden assets around the world. Monaco said the effort has relied on extensive collaboration with foreign partners.
"We need the cooperation of our international allies and partners," Monaco said. "We need their cooperation on investigations—and we're getting it. What we're seeing is this really unprecedented, galvanized international community coming together to isolate the Putin regime, to condemn its incredible brutality against the Ukrainian people."
Last year, the Justice Department seized a $300 million super yacht in Fiji, which had been owned by oligarch Suleiman Kerimov. According to the Justice Department, the vessel was able to be confiscated based on probable cause of violating U.S. law, including the International Emergency Economic Powers Act, money laundering, and conspiracy. The Justice Department also requested the seizure of a $90 million yacht off the coast of Spain, which had been owned by oligarch Viktor Vekselberg. In that instance, the alleged violations were U.S. bank fraud, money laundering, and sanction statutes.
Both Kerimov and Vekselberg had been individually sanctioned by the U.S. Treasury Department.
The Senate last month incorporated an amendment into the omnibus spending bill to use certain of these confiscated Russian assets to aid Ukraine in its war with Russia.
THE WEB OF SHELL COMPANIES
While it is relatively easy to find fixed assets like luxury yachts, jets, and real estate, it is very difficult to find out who owns them, according to Maira Martini, an analyst for Transparency International, a nonprofit that tracks money laundering around the world.
"The professionals working on those sectors might be reluctant to denounce a customer or a client," Martini said.
Moreover, those high-end clients seldom buy luxury goods in their own name. Instead, when purchasing a yacht, for example, the ultrarich often use an intricate web of shell companies. The company listed on the purchasing document is typically owned by a separate company in another country. Those two companies, in turn, might be owned by another company in a third country. These intermediary corporations rarely list the true owner's name.
Trusts complicate the ownership structure even further. These agreements are private, and there is typically no requirement for the agreement to be registered with a government authority, Martini explained.
"It's just something that we can sign, put in a drawer in our office, and that's it," Martini said. "And nobody knows that it even exists."
Among the ultraluxury goods the U.S. Justice Department has moved to seize since the start of the war are a $60 million dollar Gulfstream jet and a $350 million dollar Boeing aircraft. The pair were registered to a web of five shell companies and an anonymous trust, all of which linked back to Russian billionaire Roman Abramovich, according to court documents.
Abramovich himself has not been sanctioned in the United States. But other U.S. laws make seizures like these possible, including the Export Control Reform Act.
Last year, in response to Russia's invasion of Ukraine, the U.S. Commerce Department's Bureau of Industry and Security issued sanctions against Russia that include prohibitions on exporting or transferring certain American-made technology or American-manufactured goods. The sanctions bar those goods from being transported to Russia. American-made aircraft and aircraft parts are included in the sanctions.
According to court documents, in the wake of the Russian invasion of Ukraine, Abramovich's aircraft flew into Russia in violation of these export control laws.
The Justice Department's KleptoCapture unit does not only seek Kremlin companions hiding assets. It also looks for those who are helping these oligarchs evade sanctions. Monaco says her unit's work serves as a warning.
"To banks, to [the] aviation industry, to insurance companies, all who have to make that asset go—it's a sign and a warning to them: Be careful with whom you're dealing because we are watching," Monaco said. "And there will be consequences if you aid and abet the evasion of these sanctions."
MAKING THE U.S. LESS ATTRACTIVE FOR HIDING DIRTY MONEY
Still, the U.S. itself has more work to do to prevent oligarchs from stashing their money in the United States, according to Transparency International's Martini.
"I think the U.S. has for really long been a place considered very, very attractive to those wanting to remain anonymous, because it's very easy to set up a company in the U.S. without having to declare information about the real owners," Martini said.
Congress in 2021 approved the Corporate Transparency Act, a law requiring certain corporations and limited liability companies to report beneficial ownership information in order to do business in the United States. The law goes into effect next January.
Martini does not believe the law goes far enough because the new database of corporate-ownership information will only be available to banks and law-enforcement officials, not the public, including journalists. But she does think it will be a start in preventing dirty money from ending up in the United States.
"We hope that will facilitate, at least, the work of authorities to implement sanctions, or to prosecute individuals involved in criminal activity," Martini said.
The video above was produced by Brit McCandless Farmer and Will Croxton. It was edited by Will Croxton.
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