U.S. federal and state authorities recently announced actions that are designed to give effect to economic measures taken against Russia and hold accountable those who violate U.S. laws.  These developments suggest that U.S. authorities’ focus on enforcing U.S. sanctions and export controls, anticorruption and anti-money laundering laws, and the growing scrutiny of cryptocurrency, will continue.  They also point to further coordination and cooperation between authorities in the U.S. and other jurisdictions in investigating and prosecuting violations of their respective laws.

On March 2, 2022, U.S. Attorney General Merrick Garland announced the creation of a new, interagency “Task Force KleptoCapture” that will be dedicated to enforcing U.S. sanctions, export restrictions and economic countermeasures recently imposed against Russia.[1]  The Justice Department indicated that the task force will prioritize investigating, prosecuting and seizing the assets of Russian government officials and oligarchs who evade U.S. sanctions and other laws, as well as those who facilitate their crimes.  The new task force will include prosecutors, agents and analysts with expertise in sanctions and export control enforcement, anticorruption, asset forfeiture, anti-money laundering, tax enforcement, national security investigations and foreign evidence collection.  The Justice Department explained that U.S. authorities will share information obtained through the task force’s investigations where appropriate, including with foreign partners.

The task force builds on other Justice Department initiatives, including the Kleptocracy Asset Recovery Initiative established in 2010 to target and recover the proceeds of corruption by foreign officials.  The mission of the task force will include investigating and prosecuting violations of sanctions against Russia, prosecuting efforts to evade “know-your-customer” and anti-money laundering measures to undermine actions taken against Russian financial institutions, targeting efforts to use cryptocurrency to commit those crimes and using civil and criminal asset forfeiture to seize assets of sanctioned persons and the proceeds of unlawful conduct.  Its mandate also includes investigating and prosecuting any crimes related to its mission, including false statements to a financial institution, bank fraud and tax offenses.  As described in the Justice Department’s announcement, the task force will have access to “the most cutting-edge” investigative techniques, including data analytics, cryptocurrency tracing and information from financial regulators and partners in the private sector.

On the same day as the statement about Task Force KleptoCapture, New York Governor Kathy Hochul announced measures to strengthen enforcement by New York’s Department of Financial Services (“DFS”) of U.S. sanctions against Russia, as well as anti-money laundering laws.  The announcement addressed the use of virtual currency to evade those laws and the expedited procurement of analytics technology to monitor transactions.  DFS also highlighted its close coordination with federal and other state regulators. [2]

Most recently, on March 7, 2022, the Financial Crimes Enforcement Network (“FinCEN”) issued an alert advising financial institutions to be vigilant against efforts by sanctioned Russian and Belarusian persons to evade U.S. sanctions.[3]  FinCEN’s alert identifies certain “red flag indicators” to assist financial institutions to detect potential efforts to evade sanctions.  The alert also reminds financial institutions of their reporting obligations under the Bank Secrecy Act, due diligence obligations and sanctions compliance obligations, including that those obligations apply to convertible virtual currency transactions.  FinCEN’s announcement explained that information relevant to assist with law enforcement investigations will be shared with the Justice Department, international partners and task forces targeting assets of Russian elites.[4]

Taken together, these actions reflect U.S. authorities’ strong focus on enforcing U.S. sanctions, export restrictions and economic countermeasures recently imposed against Russia.  It remains critical for financial institutions to review and, as needed, enhance their policies, procedures and controls to address their reporting, due diligence and other compliance obligations.

[1] See the DOJ press release here.  For a summary of global sanctions and export control developments resulting from the Ukraine conflict, see our blog post here (which is updated regularly as developments occur).

[2] See the DFS press release here.

[3] See the FinCEN alert here.

[4] See the FinCEN press release here.