This Week in AML

Task Force KleptoCapture

This week the US Department of Justice announced the formation of Task Force KleptoCapture. The Task Force is an “interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures” that have been and may be issued. John and Elliot talk about the focus of the new Task Force – targeting “Russian officials, government-aligned elites, and those who aid or conceal their unlawful conduct;” and how it will combat unlawful efforts to circumvent the sanctions programs.



Task Force KleptoCapture TRANSCRIPT


Elliot Berman: Hi, John, how are you this week?


John Byrne: Hi, Elliot. Obviously, everybody's focused on what's going on in Ukraine, and I know you were able to put together a great conversation yesterday. We live-streamed the discussion of sanctions, so that continues to be an evolving, ongoing issue.


So, while there are other things going on this week, I know FinCEN issued, or treasury issued an update on some risk assessments, which people should take a look at when they get a chance. But, I thought we should continue the theme of sanctions. And one of the criticisms and criticism is probably the wrong word, but one of the questions is, are these sanctions going after the right people?


And, mainly, the focus continues to be on oligarchs. And I know that the department of justice launched a task force the other day. Did you happen to see that announced?


Elliot Berman: I did see that announcement. It's Task Force KleptoCapture, and it's an inter-agency task force, trying to, I'm quoting here, "dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures."

That have been opposed thus far, and any that may be imposed in the near future.


John Byrne: Yeah. And based on the announcement, a couple of things I thought were of note. One is it's going to be run out of the office of the deputy attorney general and have a whole series of prosecutors, agents, analysts, and staff in that department.


But also the theme that we always appreciate, and that's partnership. It's going to be working closely with agents and analysts, not just with justice, but in other agencies, FBI, Martial Service, DHS, IRS, Postal Service, which is always important. Given the skill sets of those staff and agencies in this space, especially when you're looking for financial footprints.


Elliot Berman: Yes. And the value of having all those agencies as each of them has a slightly different focus. And as you point out, great expertise. And so, what we're likely to see coming out of all the sanctions that have been put in place is an effort to circumvent those by the people who were impacted.


And so, to really be able to react to those typologies of circumvention, it's important to have the folks who have expertise in all the different ways that folks try to hide their money or avoid the impact of the sanctions might use.


John Byrne: Yeah, I'm sure you saw the same thing. It was an article over last weekend. I think in the New York Times. In the business section saying that with these sanctions, and I'm paraphrasing, all Putin needs to do is utilize cryptocurrency to evade the sanctions. It was interesting to know, and obviously, that's a very general statement. Probably there are a lot of holes in that statement. But one of the missions of this task force is targeting efforts to use cryptocurrency to evade US sanctions or a lot of the proceeds of foreign corruption.


That sort of thing, in addition to the asset forfeiture laws and regulations, which also are great tools. So, the task force has anticipated some of the venues and avenues, if you will, of movement of funds. So I think that's important and all they needed to tell us was a general what they plan to do. The specifics are obviously left up to the experts.


Elliot Berman: Right. I noted also that in the release, it was pointed out that this task force is going to, I'm quoting, "complement the work of the transatlantic task force announced by the President and leaders of the European Commission, France, Germany, Italy, the United Kingdom, and Canada." And that that announcement was last week, which has a mission "to identify and seize assets of sanctioned individuals and companies around the world."


So, in addition to a lot of coordination on the sanction side itself. It's good to see, good in the sense of making the sanctions have some impact. It's good to see there's a coordinated effort at the international level on enforcement. And this US task force will be a key player in what I'm sure is an international cooperation with law enforcement and other agencies.


John Byrne: Yeah. And you know, obviously, we, both of us, are lawyers. Part of the thing that also resonated with me was the description of how they plan to prosecute individuals that attempt to circumvent the laws or to do things like undermining restrictions taken against Russian financial institutions. But also, I don't know the specific statutes, but going after the individual conspiracy to defraud the US obstruction, obviously money laundering, false statements.


And as the press release says, the maximum penalty under many of these are 20 years in prison. So we knew this was serious, to begin with, but I think it's so important in addition to what OFAC is doing. The EU and the UN and these other jurisdictions that we're attempting to use the criminal statutes to go after all the oligarch, because as we know, go to New York, go to LA, Miami, all the real estate there that has been purchased in cash by oligarchs, is in some views, mine particularly is disgusting. And this is let's get after them and really make this hurt. And if you can do that in addition to everything else that has been announced in the past week, there can be some real impacts here.


Elliot Berman: Yes, I agree with that. And again, the unified international action has been great on the sanction side, but this, as we've already said, this effort here and comparable efforts across many of our key allies and partners will be very important in really making it have teeth. It already has teeth, and access to capital and things like that is going to become much more difficult in Russia. But, these extra-governmental actors who have, I think certainly in many ways, have laid some of the groundwork for this terrible set of events; it just seems fair to me.


John Byrne: Right. And, just a quick aside, typically, when a member of Congress makes a speech, the relevance, you know, it depends on context. But I did see something else that [if] people get a chance, take a look at this. Senator Sheldon Whitehouse from Rhode Island, just earlier this week on the floor of the Senate, talked a bit about these sorts of issues, and, you know, one of the things that he talked about is we need additional legislation. Beyond the AML laws and regs that are already out there. And that may or may not be true.


Maybe part of that is he's waiting for some of the regs to be finalized under last year's laws. But I thought it was interesting that he didn't talk about the connection between, you know, corruption and money laundering. But he also says the beneficial ownership provisions are central to all this as a countermeasure.


And you've heard that from a lot of voices of policymakers over the past week as well. And as we know, we're waiting for an eventual, beneficial ownership registry, and we're going to see how that works out. But I think a lot of people believe that this will deal with what we mentioned before, the use of real estate companies, whatever, to hide and move a little.


Elliot Berman: Yes. No question about it. So I'll do the shameless plug for our podcast. So if you enjoyed this edition of This Week in AML, please, subscribe. If you haven't already, and then you'll receive it weekly, you can find us on Spotify or Apple Podcast or wherever you get your podcasts.


John, what's up next for us in the webinars space?


John Byrne: Well, as, as we were able to do last two weeks ago, we did a What's New for 2022 that we will send that out in additional social media posts, but on March 24th, we're doing a session on Banking High-Risk Customers Across the Globe.

So that'll be something that a lot of our clients and members of the community have to grapple with because of issues like de-risking, risk mitigation, risk assessment. So we know that that's going to be a value. So one o'clock Eastern time, March 24th, Banking High-Risk Customers Across the Globe.


Elliot Berman: Yes. And let me give one more plug for what you mentioned earlier. We did a live stream yesterday on LinkedIn live about the current state of sanctioned programs. A little bit of a background and then some practical tips on what organizations should be thinking about as they're trying to react to the wave of sanctions that have been put in place. You can see that on our corporate Linkedin page, the AML RightSource page, and that's available to view at any time.


So, we urge you to take a look at that too, if you are, working in this space or need information about it. So, John, you have a great weekend, and I will talk to you next week.


John Byrne: Stay safe, Elliot. Take care. And we're always constantly thinking about our colleagues in Eastern Europe, particularly in Ukraine.


Elliot Berman: Absolutely. All right. Bye John.