Key members of the U.S. Senate say they want to enact a bold plan that could generate massive amounts of money to help Ukraine’s war efforts and to someday help rebuild the devastated nation.
The goal: speed up the seizure of luxury yachts, private jets and expensive artwork belonging to sanctioned Russian oligarchs and funnel the proceeds to Ukraine’s humanitarian aid and reconstruction.
A Senate and White House-backed proposal — dating back to just weeks after Russia’s February invasion of Ukraine — again received attention Tuesday when Senate Judiciary Committee members heard testimony on how shadowy money of the Russian elite courses through the West via opaque shell companies, real estate and luxury assets, in turn propping up the regime of Russian President Vladimir Putin.
The ease with which corrupt foreign officials and criminal organizations are able to use the U.S. financial system has been documented by the Pittsburgh Post-Gazette, which obtained access to secret bank documents illustrating that, despite hallmarks of money laundering, U.S. banks moved billions for oligarchs who were sanctioned in the years following Russia’s annexation of Crimea in 2014.
In the era of “hybrid threats,” where lawyers for Mr. Putin’s wealthy inner circle are deployed to protect assets as deadly cruise missiles tear apart civilian targets in Ukraine, “traditional tools of deterrence are no longer enough,” argued Democratic Sen. Sheldon Whitehouse, who, along with South Carolina Republican Sen. Lindsey Graham, is behind an effort to streamline the government’s authority to seize and liquidate funds or property tied to unlawful activity. Their proposal would then create an avenue for the gains to flow to Ukraine.
“Russia’s policies are inextricably linked to the interests of its corrupt billionaire oligarchs. Vladimir Putin, much like a mob boss, props up these criminals in exchange for support and legitimacy, and vice versa. As in many criminal enterprises, these oligarchs launder their dirty money through legitimate businesses and assets,” said Mr. Whitehouse, of Rhode Island.
The Biden administration cracked down on Russian oligarchs and their family members with multiple rounds of sanctions following Mr. Putin’s full-scale military invasion into Ukraine on Feb. 24. The war is now in its fifth month, costing thousands of Ukrainian civilian lives and hundreds of billions in property damage.
The bipartisan bill and a range of proposals from the Biden administration could extend the reach of the Department of Justice’s KleptoCapture task force by expanding the assets subject to seizure, extending the statute of limitations for money laundering crimes, expanding racketeering law to include sanctions evasion, and furthering international law enforcement partnerships.
Under current law, some streamlined forfeiture procedures are capped at assets valued at $500,000. Additionally, sanctions authorities, like those empowered under the International Emergency Economic Powers Act, only allow the government to freeze, but not seize, certain assets unless the U.S. is engaged in an armed conflict.
If enacted, the measures “would pave the way for prosecutions that appropriately capture the scope and the complexity of those evasion networks,” said Andrew Adams, task force director.
The task force worked with international partners to seize a $90 million Russian-owned yacht in Spain, and, in agreement with the government of Fiji, seized and transferred a $325 million luxury vessel — outfitted with a helipad — from the South Pacific island to San Diego.
The 350-foot superyacht’s owner, Suleiman Kerimov, was sanctioned by the U.S. Treasury Department in 2018 for allegedly profiting from the annexation of Crimea. The Treasury Department in June blocked access to $1 billion of Mr. Kerimov’s assets held in a Delaware-based trust.
“These oligarchs are all parasites looking to suck industries dry, while opening doors to regimes like the Kremlin, and acting as effective wallets to help bankroll Russia’s aggression and threaten American national security in the process,” testified Casey Michel, money laundering expert and author of American Kleptocracy.
The U.S. must not appear “happy to keep the doors and malign finance open funding the worst regimes on this planet,” he continued.
The Senate and Biden administration proposals were met with some concern from the committee’s ranking member Sen. Chuck Grassley, of Iowa, who raised concerns about whether the proposal was in line with the U.S. Constitution.
“Otherwise, we run the risk of convictions being reversed and assets being given back to the very criminals we’re seeking to hold accountable,” he said.
Mr. Whitehouse’s office maintains the senators’ bipartisan proposal is written with a “sound legal and constitutional framework.” As proposed, additional authority would be triggered by a presidential emergency declaration and would sunset after a fixed period of time. The forfeiture process would include a pre-seizure warrant requirement, the opportunity for a property owner to challenge a forfeiture order in court, and the right to an appeal, according to a spokesperson.
The bill is still under negotiation and a timeline for further committee action is unclear.
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