VOA Interview: How US Enforces Russia Sanctions

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On December 13, 2022, Posted by , in Новини, Світ, With No Comments

Veteran federal prosecutor Andrew Adams is the director of the Justice Department’s Task Force KleptoCapture, an interagency initiative launched in March to enforce sweeping sanctions that the United States and its allies imposed in response to Russia’s invasion of Ukraine.

On Thursday, Adams, during a visit to Washington, sat down with VOA Justice Correspondent Masood Farivar to discuss the task force’s investigations and asset seizures, the challenges it faces, and the unprecedented level of cooperation between law enforcement agencies.

The following transcript has been edited for clarity and length.

VOA: It’s been more than nine months since the attorney general [Merrick Garland] launched the Task Force KleptoCapture and appointed you as director. Can you give us an update on the task force’s activities to date and how the asset seizure process is going?

Andrew Adams: In the early days of the task force, we locked down, we seized a few mega yachts, one in Spain, one in Fiji. We took some action against bank accounts and financial institution accounts here in the U.S. and abroad. And we were engaged heavily in providing information to our foreign partners so that they, too, could take similar kinds of steps.

Since then, we have seen essentially an escalating series of seizures. It has included real estate, it has included airplanes and other luxury assets. And at the same time, you’re beginning to see the fruits of a secondary focus, which has been on facilitation. Separate and apart from people who are on the sanctions list or entities that are on the sanctions list, what we have been looking at from the jump has been money laundering and sanctions evasion committed by people who are not on those lists but professional money launderers.

In the last several weeks, what you’re seeing are the fruits of that effort in the form of criminal indictments against people like [British businessman] Graham Bonham-Carter with respect to Mr. [Oleg] Deripaska and others who are essentially professional money movers engaged in poking holes in the sanctions regime.

VOA: And who else falls under that category of facilitator? Is it banks, is it brokers, who are they?

Adams: What we look at are really any kind of gatekeepers to the otherwise legitimate financial system. So you’re right, we look at banks, but we look at financial institutions more broadly. We look at family funds, hedge funds, venture capital funds. We look at cryptocurrency and more novel fintech institutions where there may be opportunities to move money. We look at real estate brokers, dealers, security brokers, dealers. Truly across the spectrum of the financial sector.

 

VOA: The last number on seized elite Russian assets was roughly $39 billion to $40 billion. Do you have a more up-to-date figure?

Adams: In some ways, it is hard to encapsulate the number, especially when you’re looking internationally. And I think the number that you’re citing is an international …

VOA: U.S. and international …

Adams: That’s right. So it can be difficult in some ways, in part because there are different kinds of powers at play here – differences, for example, between our seizure power which has targeted hundreds of millions of dollars’ worth of assets, including yachts, including real estate, and freezing power, which is short of a seizure, but in some ways is as effective, certainly can be as effective.

VOA: And how much of the assets have been seized by the U.S. versus U.S. partners? Do you have a breakdown?

Adams: With respect to seizure and forfeiture, the U.S. has, I think, taken a leading role in that respect. Globally, in terms of freezing and holding assets in place under the powers that look a lot like our Treasury’s blocking powers, that’s certainly been a focus for us…but it is the case that most assets that are targeted in the world are outside of the United States. And that figure, I think, is relatively large within the EU and globally. And what I would emphasize on that, again, is the power of that freezing is potentially just as powerful in terms of blocking the Russian military from arming itself, the Russian state from conducting its otherwise illegal business.

VOA: Now some of the seized assets have been transferred to the U.S., such as the superyacht that was sailed from Fiji to San Diego a few months ago. What is the status of that yacht and other assets that have been moved to the U.S.?

Adams: So the process for fully forfeiting an asset, a yacht for example, includes both the seizure, the transport of it to the U.S. and ultimately the filing of a civil forfeiture complaint if there is going to be litigation over the disposition of the asset.

I expect that assuming that we go all the way down the line with no agreements, we would have to file a civil forfeiture complaint. And we do that relatively expeditiously, a matter of months in some cases, and during that process, the investigation continues.

VOA: Have any of these lawsuits been fully adjudicated?

Adams: Nothing that has been seized has been fully adjudicated as yet. We have recently filed some civil forfeiture complaints targeting some bank accounts most recently tied to [Russian billionaire and close Putin ally] Konstantin Malofeev, and so that you’ll begin to see movement on the civil side there. And actually, just yesterday [December 7], we filed a civil complaint through the Eastern District of New York targeting two real properties, townhomes in Los Angeles tied to Andrii Derkach [a Ukrainian businessman and former member of Ukraine’s parliament who was sanctioned by the U.S. Treasury Department in 2020].

VOA: Do you expect any legal challenges from the owners of these assets? Could that complicate the process of selling off the assets?

Adams: We certainly expect challenges. I expect challenges from not just the owners of the assets, but from people who are paid to pretend that they are the owners of the assets. … I fully expect that they will be well-financed. And it’s a challenge that we’re ready to meet.

VOA: Has anyone filed a challenge to date?

Adams: Publicly, no one has filed a challenge on any of the publicly filed complaints. We have had outreach from people prefiling and we’re dealing with that in due course.

VOA: I have a question about the maintenance of the assets. I take it the DOJ currently maintains assets that have been transferred to the U.S. What is the cost of their maintenance cost?

Adams: When we take possession, when we seize an asset, that’s correct, we do undertake to maintain the asset. The reason for that is twofold. First, it’s because it maintains the resale value of the asset. … The second is it’s really a question of due process. When we take the seizure, we are at least temporarily divorcing that asset from someone who claims to be the rightful owner. And it’s our obligation to undertake the asset and to make sure that it doesn’t effectively disappear before we have a chance and before potential claimants have a chance to put in their claims and to test the government and in court, if need be. That due process commitment is one that I think is vitally important to the entire program that we are undertaking here and distinguishes us from authoritarian regimes where straight confiscation without due process of law is a matter of course.

VOA: The Justice Department has in the past asked Congress for statutory authority to transfer the proceeds of these confiscated assets to [pay] for Ukraine’s reconstruction.

There’s bipartisan support for that measure in Congress, but Congress hasn’t acted. Do you expect to receive that authority and eventually transfer the funds to Ukraine?

Adams: The request for that authority to streamline and to clarify our ability to make these assets ultimately available for Ukrainian reconstruction is a priority for the department. It really undergirds the entire program here. The point of these asset seizures is to make the assets available. And it is the case today that there are certain restrictions on how we can dispose of forfeited assets. That requires some legislative fix to fully implement what we hope to be able to do. I’ve seen a lot of activity on the Hill, in Congress and with our Office of Legislative Affairs. I’m optimistic that we’ll continue to press this forward. It’s clearly a priority and deeply felt priority for people across the spectrum here in the U.S.

VOA: And as soon as you receive the authority, you can start transferring funds to Ukraine. How soon could that happen?

Adams: With that authority in place, hypothetically, we would be able to transfer fully forfeited assets to Ukraine. The notion here is not to have a shortcut around due process. The idea here is to ensure that we have a mechanism in place under the law to get dollars from point A to point B, after a full due process is undertaken.

VOA: But you don’t have any assets that have been fully forfeited.

Adams: That’s right. In the first few months of the task force, seizures have occurred, filings have occurred, but this is a process that can take longer.

VOA: Help our audience understand how you go about doing your work, identifying assets to seize. The Treasury Department has published lists of sanctioned entities and individuals, and I believe there’s over a hundred of them. Do you work off of those lists? Are those entities and individuals being investigated by your task force?

Adams: We’ve taken a two-pronged approach. The first is to think about our priority targets based on entities and individuals who are on OFAC [Office of Foreign Assets Control] Sanctions List and on the Commerce Department Entity List. … Beyond that, we are looking at facilitators, people who are not necessarily on that list, but who are potential gateways for sanctions evasion, potential gateways for money laundering and targets of opportunity.

VOA: How do you identify those facilitators?

Adams: A number of ways. I mean, we take an approach that we take to really any organized crime task force here. We are looking at confidential sources. We talk to witnesses. We talk to whistleblowers. We talked to the private sector all the time to get indications of red flags and problems. And we use all the tools available in any good, organized crime investigation. We’re talking about search warrants. We’re collecting data through subpoenas. We’re collecting data through intelligence methods, for example, truly any tool to bear is being brought to bear to build these cases.

VOA: Given the very large number of entities and individuals that have been sanctioned, you must have a lot of investigations often interconnected and perhaps overlapping going on at the same time. Can you give me a sense of how many investigations you have ongoing?

Adams: Oh, dozens, dozens of investigations at any given moment. The task force, it is important to note, builds off DOJ’s [Department of Justice] long-standing commitment to fighting kleptocracy. So there are and have been cases where people who fall within our ambit have been on the radar for some time. And those cases are in some in some cases quite mature. … So prosecutors around the country, hundreds of prosecutors who have thought about this problem for years, are now being focused, channeled and having resources devoted to their efforts, and meeting with international cooperation to a truly unprecedented degree. But what that means is the dozens of cases that have existed are now complemented by dozens, truly dozens of cases that have arisen since the initiation of the task force and are now seeing essentially a springboard in resources and international mirroring.

VOA: Financial crime investigations, organized crime investigations are notoriously time-consuming. Do you have the resources to speed up the process to actually produce results while the war is going on?

Adams: We do today, and in large part that’s because we have international cooperation and international buy-in in an unprecedented degree. The world one year ago looked very different than it does today, in terms of our laws as compared to the laws of our European partners, our partners in the United Kingdom, our partners across the globe. Today, the existence of sanctions regimes in those foreign partners that look like ours gives us the ability to bring a request for a search, bring a request for an arrest, bring a request for a seizure to a foreign partner and have it recognized instantly as valid and something that can be enacted under their own laws. That greatly speeds up our process both for investigation and for taking action, and it’s the reason that in the short time period that the task force has existed, we’ve seen some real successes across the globe.

VOA: Do any U.S. allies or other countries, particularly stand out in terms of their robust sanctions enforcement and the level of cooperation and coordination that they have engaged in?

Adams: I’d say two things on that: There are certainly long-standing partners who continue to be linchpins in this effort. In the United Kingdom and in the EU and EU member states, we see cooperation, truly every day in any number of cases across the department. But with a particular focus today on this problem set and that’s only strengthened over the last 10 months that we’ve been doing this. It’s also the case that we find partnership sometimes more, more quiet partnership in pockets of the world that I think have historically been viewed as more difficult to operate in as U.S. law enforcement, more opaque from investigation. But where we are seeing indications of cooperation and sometimes sharing of information that makes our makes our seizures and makes our, our investigations more streamlined and, in some cases, possible.

One thing that the task force has undertaken to do is to bring cases where we see cases and to speak as publicly as possible and as quickly as possible about our investigations where we see a problem. So we’ve unsealed affidavits in situations that are more aggressive than the typical DOJ policy for unsealing affidavits. And the point there is to give a clear picture and a clear roadmap for our investigations so the people in the private sector, at banks and insurance companies at maritime services companies, aviation services companies, can see our work, see how we have built this case, see the names of entities and shell companies’ structures, straw men and cutouts, and take their own action to cut those people and those entities out of the legitimate financial sector, even if we can’t find cooperation in a particular jurisdiction.

VOA: In terms of the targets of your investigation, it’s not just the Russian elite, Russian oligarchs with ties to the Kremlin that you’re investigating. Ukraine has its own share of corrupt oligarchs, as does Belarus, a Russian ally. Just yesterday [December 7] the Justice Department announced the indictment of Ukrainian oligarch Andrii Derkach. Can you talk about those cases? To what extent is your task force focused on non-Russian oligarchs that have assisted the Kremlin?

Adams: The focus I would say is on the political regime in the Kremlin. It’s not a nationality specific program here. And it’s the case that there are Americans, there are U.K. citizens who have been targeted and arrested in this, in this effort. The problem is global in that respect.

And the other point that I would make on this is that oligarchs are among, I think, the most prominent targets and certainly the ones that we talk about publicly the most. But it is not coextensive with the full set of targets here. People who are on the OFAC sanctions list go well beyond rich oligarchs. In some cases, we’re talking about particular companies that are critical to the Russian military and Russian intelligence services. In some cases, we’re talking about politically well-connected people within the Kremlin sphere of influence who may not be the billionaires that we think of when we talk about oligarchs.

VOA: Derkach can’t possibly be the only Ukrainian or Russian oligarch with illicit assets in violation of U.S. sanctions in the U.S. I know you can’t talk about ongoing investigations, but are you looking at those types of people in the U.S.? How many of those cases are you investigating?

Adams: Yes, we’re looking at both people and assets who are in the U.S., both in terms of oligarchs who may have assets in the United States that represent the proceeds of a sanctions violation. And you’ve seen now the Derkach case just yesterday, the Deripaska indictment has publicly listed certain assets, real estate and, in some cases, very extravagant real estate in the criminal indictment, as forfeitable property. So we are looking at that in the United States. But the other point that I think is worth keeping in mind for understanding the international scope of what we’re trying to do, the United States has had a robust sanctions regime targeting Russian oligarchs, targeting the Russian war machine since late 2014 at the, at the very latest, and that was in response to the original Crimea invasion.

Since that time this has been a focus of different pockets of the DOJ. … And as a result, the United States has for the better part of a decade, not been a friendly jurisdiction for Russian sanctioned oligarchs to park their money or to park their real estate. We see it and we see efforts to evade those U.S. sanctions because the United States is an attractive place to keep extremely nice real estate and to keep your bank accounts in a steady economy. But it has been the case for almost a decade that this has been a target set. And as a result … many of these assets are more likely to be held abroad and that our actions, even under U.S. law, will require us to work internationally.

VOA: You’ve been active in this space for a number of years, investigating financial crimes and bad actors connected to the Kremlin. Critics say the problem should have been confronted head-on a long time ago and that it took Russia’s invasion of Ukraine for the U.S. and its allies to really focus on this problem. How do you respond to that?

Adams: Well, I know certainly within DOJ that there have been people dedicated to the problem for, for years. At the money laundering unit within the Southern District, this has been a priority. At DOJ, there’s been a kleptocracy unit with a particular expertise in Ukraine for a decade now, with some significant success. The difference between now, from my perspective, and a year ago, is the international ability to operate. Watching other countries enact their own sanctions, enact their own criminalization of sanctions evasion is a game-changer for the United States.

Also, we may be able to investigate and have many of these cases essentially ready to go without an opportunity to take action abroad or to take critical investigative steps abroad, unless our laws are mirrored to some extent abroad.

And in the last several months, we’ve seen that mirroring happening to an unprecedented degree. And a logjam really being broken in that respect. With that realignment in an unprecedented way, you’re seeing an unprecedented number of arrests and seizures.

VOA: What’s been the role of the Ukrainian government in all of this?

Adams: So my interaction with the Ukrainian government has been entirely impressive from my perspective.

Since taking this role, I’ve been in contact with counterparts in Ukraine at the Ministry of Justice and their prosecutor general’s office. And it is hard to overstate the effort and the commitment that those men and women have had over these months, working from bomb shelters, working remotely from points of exile and then returning to Kyiv to continue this effort. They are working in horribly dire straits. But what they are doing from at least as it intersects with my work, is continuing to drive investigations of an overlapping set of targets, looking at oligarchs, looking at sanctioned individuals. And facilitating our investigations by collecting information, providing information where it’s useful and getting the United States in a position to take whatever action we can to assist Ukraine. And at the same time, what we are looking to do, is to make available information and make available opportunities for Ukraine to meet its own success under its own laws, if and when they see opportunities to act there.

VOA: The task force has been a key part of the Biden administration’s response to Russia’s invasion of Ukraine. What impact do you think you’ve had on Russia’s warfighting capabilities?

Adams: I think we certainly see a decrease in economic activity writ large. We see people from Western countries divesting from [Russia] quickly, part of that is out of a moral and ethical responsibility. Part of that, I think, is because they see the sanctions as essentially insurmountable from a financial perspective. The other aspect that I think has been particularly impactful has been not on the economic sanctions but on export controls: the Commerce Department powers to shut down the importation of semiconductors, the importation of dual-use technology that can go into the creation of high-tech weaponry and to shut down even the transportation of lower-tech munitions and ammunition. That I think has a real impact on the Russian military, and essentially, every time that we stop a semiconductor from transiting the border, every time we stop a bullet from crossing over the Russian border is a life saved.

VOA: Finally, moving forward, what role do you see for the task force in the post-war period?

Adams: Our focus is truly and squarely on this particular emergency at this particular time. I think that we have lessons learned in terms of how to construct an emergency response to a truly multilateral sanctions enforcement effort that may be useful in other contexts. But our focus has been squarely on Russia and will continue to be so.

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