EXPLAINER: Why US needs a law to sell off oligarchs’ assets

Apr 28, 2022, 2:21 PM | Updated: Apr 29, 2022, 6:31 pm

WASHINGTON (AP) — President Joe Biden doesn’t want to just seize the yachts, luxury homes and other assets of Russian oligarchs, he wants to sell off the pricey 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 to pay for the enormous costs of defending Ukraine, the Biden administration on Thursday called on Congress to enhance U.S. authority to liquidate assets seized from Russian elites — the “bad guys,” as Biden called them.

A look at what’s afoot:

WHAT’S ALREADY BEING DONE?

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

The package that Biden sent to Congress goes further to create a new criminal offense, making it unlawful for anyone to knowingly own proceeds directly obtained from corrupt dealings with the Russian government. Additionally, property used to facilitate sanctions violations would also be eligible for seizure.

The White House says the new tools make sanctions more difficult to evade and the administration said it wants to use the money “to remediate harms of Russian aggression toward Ukraine.”

WHY DOES THE GOVERNMENT NEED LEGISLATION?

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

The White House proposal also wants to make forfeiture decisions 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 because of the nature of the U.S. sanctions program, “we could see a lot of lawsuits as there’s a process one could take to challenge the forfeiture itself and they absolutely will,” anticipating sanctioned oligarchs’ future litigation.

HOW MUCH HAS ALREADY BEEN SEIZED?

The White House says the Treasury Department has sanctioned and blocked vessels and aircraft worth over $1 billion, and has frozen bank accounts containing hundreds of millions of dollars of assets belonging to Russian elites. During a House committee hearing Thursday, the Treasury Department’s Financial Crimes Enforcement Network’s acting director, Himamauli Das, said the agency has received 2,000 suspicious activity reports connected to Russian oligarchs. Of those, 271 were forwarded to intelligence and law enforcement and Treasury’s sanctions arm.

HOW CAN THE MONEY FROM SEIZED ASSETS BE USED?

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

The House-passed Asset Seizure proposal 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 Ukrainian refugees, weapons for Ukraine’s military and humanitarian support for the Russian people.

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

Attorneys have said the process of actually liquidating and using the funds could take years.

WHAT ABOUT RUSSIAN CENTRAL BANK ASSETS?

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

However Russia’s more than $600 billion foreign reserve fund has been frozen by the U.S. 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 so lightly,” adding that it would have to be done in consensus with U.S. allies and partners.

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

HOW WOULD THE NEW LAW ON PROCEEDS FROM CORRUPT DEALINGS WORK?

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

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

In order for the Justice Department to seize a yacht, prosecutors must first spell out their case and obtain a seizure warrant from a federal judge. The U.S. government would then need to pay to maintain, transport and dock the mega yachts until they can be sold off at auction.

The funds from the sale flow into the Justice Department’s asset forfeiture fund.

The government wants to use some of the forfeiture funds to support Ukraine, though the law doesn’t currently easily allow for that to happen, Garland said at a House subcommittee hearing on Thursday.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Haitian migrant Gerson Solay, 28, carries his daughter, Bianca, as he and his family cross into Can...
Associated Press

US, Canada to end loophole that allows asylum-seekers to move between countries

President Joe Biden and Canadian Prime Minister Justin Trudeau on Friday announced a plan to close a loophole to an immigration agreement.
3 days ago
Expert skateboarder Di'Orr Greenwood, an artist born and raised in the Navajo Nation in Arizona and...
Associated Press

Indigenous skateboard art featured on new stamps unveiled at Phoenix skate park

The Postal Service unveiled the “Art of the Skateboard" stamps at a Phoenix skate park, featuring designs from Indigenous artists.
3 days ago
(Facebook Photo/City of San Luis, Arizona)...
Associated Press

San Luis authorities receive complaints about 911 calls going across border

Authorities in San Luis say they are receiving more complaints about 911 calls mistakenly going across the border.
9 days ago
(Pexels Photo)...
Associated Press

Daylight saving time begins in most of US this weekend

No time change is observed in Hawaii, most of Arizona, Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Marianas.
17 days ago
Mexican army soldiers prepare a search mission for four U.S. citizens kidnapped by gunmen in Matamo...
Associated Press

How the 4 abducted Americans in Mexico were located

The anonymous tip that led Mexican authorities to a remote shack where four abducted Americans were held described armed men and blindfolds.
17 days ago
Tom Brundy points to a newly built irrigation canal on one of the fields at his farm Tuesday, Feb. ...
Associated Press

Southwest farmers reluctant to idle farmland to save water

There is a growing sense that fallowing will have to be part of the solution to the increasingly desperate drought in the West.
24 days ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
...
Quantum Fiber

How high-speed fiber internet edges out cable for everyday use

In a world where technology drives so much of our daily lives, a lack of high-speed internet can be a major issue.
(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
EXPLAINER: Why US needs a law to sell off oligarchs’ assets