DOJ Announces Early Targets of Task Force KleptoCapture, Elite Anti-Money Laundering Initiative Established to Halt Russian Oligarchs and their Co-Conspirators in the International “Invisible Economy”

In late May, a court in the Pacific island nation of Fiji upheld on appeal the detention of the 348-foot Amadea, reportedly owned by Russian oligarch Suleiman Kerimov, whose wealth largely derives from his 76% stake in Russia’s biggest gold producer, Polyus.  The United States Treasury sanctioned Kerimov in 2018 for alleged money laundering related to the purchase of French villas.  The EU sanctioned him in earlier this year, and the Fijian seizure came at the recent request of U.S. authorities operating under DOJ’s newly-minted Task Force KleptoCapture, a calibrated law enforcement initiative announced by Attorney General Merrick Garland in March 2022 in an effort to dampen Vladimir Putin’s warmongering land invasion of Ukraine and Eastern Europe.

This high-seas legal drama being orchestrated far beyond the enclaves of a U.S. federal courtroom underscores both the global scope of kleptocratic money laundering and the challenges Task Force KleptoCapture face.    Run by the Office of the Deputy Attorney General and headed by former New York federal prosecutor Andrew Adams, Task Force KleptoCapture has already successfully projected the force of U.S. law against wealthy and influential persons like Kerimov who otherwise avoid U.S. sanctions by remaining abroad.  Formed specifically to target sanctions evasion, Task Force KleptoCapture’s distinctive composition and mission is tailormade to apply pressure those who actively or by their “criminal[] silen[ce]” enable the Ukraine war.  Distinct from the U.S. Department of Justice’s existing Money Laundering and Asset recovery Section (“MLARS”), KleptoCapture’s narrower focus on sanctions evasion falls outside of MLARS and is likely to promote greater agility and short-range results, including erosion of material and moral support for Putin’s aggression.

Task Force KleptoCapture’s international victory in the Amadea case foreshadows the future landscape of litigation.  A key question was whether Kerimov actually owned the Amadea.  As Forbes reports, the vessel’s registered owner is an Isle of Man-based company whose registered owner is actually Eduard Khudainatov, the former CEO of Russian state oil giant Rosneft.  Khudainatov is a close ally of Igor Sechin, an ally of Putin’s secretary in St. Petersburg in the early 1990s.  Khudainatov is also linked to the 460-foot Scherazade—one of the world’s largest private yachts worth an estimated $700 million—which is being investigated by Italian authorities.  Ultimately, the U.S. government’s contention—as expressed in its warrant—that it was extremely unlikely that Khudainatov possessed the resources to own and maintain “more than $1 billion worth of luxury yachts” persuaded the Fijian appellate court.  In the Amadea case, this question will be reviewed at least one more time: the lawyer for Khudaintov’s company has obtained a stay of the Court of Appeal judgment pending review by the Chief Justice of the Fiji Supreme Court.

But the case illustrates the frustratingly opaque web of corporate ownership that hinders American and European prosecutors investigating sanctioned Russian oligarchs and their co-conspirators who aid Putin’s war effort.  The Russian President has deployed a global empire of money laundering emissaries since the early 1990s when Putin first began using his KGB skillset developed by funding and operating illegal international missions against the West in the waning days of the Cold War to liquidate Soviet state coffers that had been under iron-fisted Soviet control for more than seventy years.  Thirty years later, intelligence officials estimate Putin’s global control of offshore cash and assets is in the hundreds of billions of dollars, moved and used strategically to fund his initiatives to antagonize the West. 

Major data leaks and high-profile media projects such as the 2016 Panama Papers have cast important spotlights on these syndicates and their methods which the world’s most rogue regimes such as Venezuela and Iran employ to hide personal wealth and prevent confiscation of ill-gotten gains by prosecutors.  Earlier this year, an anonymous leaker published documents revealing 30,000 Credit Suisse customers.  And, unsurprisingly, among the list were oligarchs, corrupt government officials and drug smugglers.  Following this revelation, in March—shortly after President Joe Biden announced his intention to come after those profiting from flouting U.S. Law in his State of the Union Address—a letter from Credit Suisse urging its investors to destroy documents relating to loans backed by “jets, yachts, real estate and/or financial assets” was turned over to world news outlets.  Swiss banks have long been scrutinized for enabling questionable and even immoral conduct, and the revelations here are not newsworthy so much for outlining the standard oligarch playbook but rather for the willingness of investors to voluntarily shed light on the traditionally tightly-sealed operations of Swiss banks. 

To match the evolving playbook of sanctions-avoidance, Task Force KleptoCapture will also focus on cryptocurrency.  Obfuscatory transactions using the anonymity afforded by the underlying technology of crypocurrency to funnel crypto assets through multiple accounts with peel chain tactics is no guarantee against discovery.   Both the FBI’s June 2021 recovery of the Colonial Pipeline ransom and its February 2022 recovery of billions of stolen cryptocurrency amply demonstrate that cryptocurrency transactions can be traced and wrongdoers captured.  Attorney General Merrick Garland’s promise to use the most sophisticated technologies should put those who would avoid sanctions on notice.

It will be over the coming weeks and months that the continued effectiveness of Task Force KleptoCapture will be tested.  It must face the legal and logistical hurdles of foreign criminality, viz., establishing ownership of property and assets, tracing and establishing criminality, and entering and enforcing Mutual Legal Assistance Treaty requests.  But one thing is for certain: the creation of this Task Force and its victory in the Fiji Court of Appeal was a warning shot fired across the bow of those who would avoid the law.  Or, at least, across the bow of their million‑dollar yachts.

Contributing Advisors

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