The Justice Department recently announced issuance of seizure warrants for a luxury yacht and airplanes located in various foreign countries and owned by sanctioned Russian oligarchs. The warrants anticipate the seizure and confiscation of property related to these individuals violating Russian sanctions and federal money laundering statutes. The affidavits filed in support of the warrants supply a statutory road map for the government's authority in these cases. Some Members of Congress have introduced a growing number of legislative proposals related to the seizure of property owned by sanctioned Russian oligarchs and those associated with the Russian regime, including H.R. 6930, which passed the House on April 27, 2022. In addition, the Senate Judiciary Committee conducted a hearing on July 19, 2022.
Background
In response to Russia's attacks on Ukraine in 2014 and 2022, both President Obama and President Biden invoked the International Emergency Economic Powers Act (IEEPA) to imposed sanctions on a number of Russian individuals and entities. To facilitate enforcement of those sanctions, Attorney General Garland created a KleptoCapture task force, and the Treasury Department's Financial Crimes Enforcement Network issued an Advisory on Kleptocracy and Foreign Public Corruption, which "urg[ed] financial institutions to focus their efforts on detecting the proceeds of foreign public corruption."
Russian oligarchs allegedly acquired and maintained the yacht and planes that are the subject of the seizure warrants through a series of shell companies and straw men. These transactions often involved electronic fund transfers in the Cayman Islands, Cyprus, and the Channel Island of Jersey.
Legal Context
Criminal and civil forfeiture begins with a crime. In the case of the seizure warrant for the yacht, the affidavit in support of the warrant refers to violations of IEEPA and the money laundering statute; in the case of the seizure warrant for the planes, the affidavits refer to violations of IEEPA, the money laundering statute, and the Export Control Reform Act (ECRA). In both affidavits, the IEEPA and ECRA allegations flow from charges of willful violations of executive orders, regulations, and licenses relating to the sanctions against Russia. Additionally, the affidavits allege IEEPA violations and the use of correspondent banking accounts, which implicate the money laundering statute. The government stated that "[n]early all U.S. dollar wire [transfer] transactions conducted by foreign financial institutions are processed through correspondent bank accounts held in the United States."
The government may confiscate crime-tainted property only when a statute declares such property forfeitable. The yacht and airplane affidavits rely on the statute that renders forfeitable property constituting, derived from, or traceable to money laundering predicate offenses such as IEEPA violations.
Courts in civil forfeiture cases, such as in the examples provided, ordinarily treat the forfeitable property as the defendant in the proceeding and requires seizure of the property. The U.S. District Court for the District of Columbia may issue seizure warrants for forfeitable property located abroad. Foreign authorities will execute the warrants pursuant to mutual legal assistance treaties or agreements with the United States.
Once the confiscated yacht and airplanes have been auctioned off, the proceeds would be deposited in the Treasury Department Forfeiture Fund.
Document ID: LSB10840