EXPLAINER: Why the US needs a law to sell the assets of the oligarchs | New Policies

By FATIMA HUSSEIN and MICHAEL BALSAMO, Associated Press

WASHINGTON (AP) — President Joe Biden not only wants to seize the yachts, luxury homes and other assets of Russian oligarchs, he wants to sell off the expensive goods and use the money to help rebuild Ukraine.

He’s asking Congress to streamline the process to allow that to happen.

In the latest attempt to pressure Russia to end its war and pay the huge costs of defending Ukraine, the Biden administration on Thursday called on Congress to strengthen US authority to liquidate the assets seized from Russian elites — the “bad guys,” as Biden called them.

WHAT IS ALREADY DONE?

The House on Wednesday passed the Ukraine Reconstruction Asset Seizure Law, with only four lawmakers voting against the measure. The bill, which is now going to the Senate, would allow the president to confiscate and liquidate property belonging to sanctioned individuals. The money could only be used for specific purposes.

The package Biden sent to Congress goes further to create a new criminal offense, making it illegal for anyone to knowingly possess proceeds directly obtained from corrupt dealings with the Russian government. In addition, assets used to facilitate sanctions violations would also be subject to seizure.

The White House said the new tools made sanctions harder to avoid, and the administration said it wanted to use the money “to address damage from Russian aggression against Ukraine.”

WHY DOES GOVERNMENT NEED LEGISLATION?

Under current federal law, only the Department of Justice has the authority to determine how seized funds may be spent. And there are strict rules on who can benefit from seized products. The Biden administration wants to make it easier for officials to decide how to use proceeds from frozen and seized assets.

The White House proposal also wants to make forfeiture orders reviewable in federal court on an expedited basis.

Ryan Fayhee, a former Justice Department prosecutor who now works in private practice on sanctions cases, said that due to the nature of the US sanctions program, “we could see a lot of prosecutions because there’s a process that one could follow to challenge the confiscation itself, and they absolutely will,” anticipating future litigation from sanctioned oligarchs.

WHAT QUANTITY HAS ALREADY SEIZED?

White House says Treasury Department has sanctioned and blocked ships and planes worth over $1 billion, and frozen bank accounts containing hundreds of millions of dollars in elite assets Russians. During a House committee hearing on Thursday, the acting director of the Treasury Department’s Financial Crimes Enforcement Network, Himamauli Das, said the agency had received 2,000 reports of suspicious activity related to Russian oligarchs. Of these, 271 were forwarded to intelligence and law enforcement agencies and the Treasury Sanctions Department.

HOW CAN MONEY FROM SEIZED ASSETS BE USED?

Among other proposals, administration package extends statute of limitations on money laundering investigations based on foreign crimes from five to 10 years, adds evasion of sanctions to definition of ‘racketeering activity’ in the Racketeer Influenced and Corrupt Organizations Act and would enhance the powers of the government to work with other countries to recover assets linked to foreign corruption.

The asset seizure proposal passed by the House is more limited than the president’s proposal, where confiscated funds could only be used for specific purposes, including post-conflict reconstruction of Ukraine, support for refugees Ukrainians, weapons for the Ukrainian army and humanitarian support for the Russian people. .

In addition, the administration could only seize the assets, within two years of the bill’s enactment, if Russia remains committed to its invasion of Ukraine, the president imposed sanctions on the owner of the assets due of the ongoing conflict and the assets are worth more than $5 million.

Lawyers said the process of liquidating and using the funds could take years.

WHAT ABOUT THE ASSETS OF THE RUSSIAN CENTRAL BANK?

The package Biden sent to Congress does not address Russian Central Bank assets.

However, Russia’s more than $600 billion foreign exchange reserve fund has been frozen by the United States and its allies.

Treasury Secretary Janet Yellen said last week that the prospect of using frozen Russian Central Bank funds to support Ukraine should be considered, but “I wouldn’t want to do that lightly,” adding that this should be done in consensus with US allies and partners.

In a virtual address to heads of the International Monetary Fund and World Bank last week, Ukrainian President Volodymyr Zelenskyy said proceeds from sanctioned assets and Central Bank reserves should be used to compensate Ukraine for its losses. .

HOW WOULD THE NEW PROCEEDS OF CORRUPTION ACT WORK?

The Justice Department and Treasury are already targeting assets of Russian oligarchs they say have evaded sanctions, including a 254ft yacht that was in Spain and belonged to an oligarch with close ties to Russian President Vladimir Putin.

Attorney General Merrick Garland said Thursday that the Justice Department’s task force focused on Russian oligarchs — known as KleptoCapture — plans to undertake “at least 30 complex investigations over time.”

In order for the Justice Department to seize a yacht, prosecutors must first state their case and obtain a warrant of seizure from a federal judge. The US government would then have to pay to maintain, transport and moor the mega yachts until they could be auctioned off.

Proceeds from the sale go to the Justice Department’s Asset Forfeiture Fund.

The government wants to use some of the confiscated funds to support Ukraine, although the law currently does not allow that to happen easily, Garland said during a House subcommittee hearing on Thursday.

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