Senate Making Progress on Russian Asset Forfeiture, Sanctions Evasion Legislation
The Senate is making progress on bipartisan legislation that would give the administration stronger authorities to investigate, prosecute and seize the assets of sanctioned Russian oligarchs, including in cases of sanctions or export control evasion. The proposals received broad support this week from Senate Judiciary Committee members, who said DOJ’s powers should be expanded and bolstered to better punish Russian war crimes.
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“The current law isn't flexible enough to allow us to respond effectively to the crisis in Ukraine,” committee chair Sen. Sheldon Whitehouse, D-R.I., said during a hearing this week. "The unprecedented scale of [Russia’s] looting and secrecy demands ever nimbler and more creative responses. Congress has worked to do.”
The support for the measures, some of which were included in a bipartisan bill introduced in March, comes after President Joe Biden earlier this year asked Congress for stronger asset-seizure authorities (see 2204280016). Among the proposals being considered by the Senate is a new authority that would allow the U.S. to transfer forfeited assets to a Ukrainian relief fund, Whitehouse said. Another would add sanctions and export control evasion as a crime under the definition of “racketeering activity” in the Racketeer Influenced and Corrupt Organizations Act.
Andrew Adams, director of DOJ’s Task Force KleptoCapture, told the committee the agency is especially keen on expanding the definition of racketeering activity. “This proposal would extend a powerful forfeiture tool against racketeering enterprises engaged in sanctions evasion,” Adams said, “and it would pave the way for prosecutions that appropriately capture the scope and the complexity of those evasion networks.”
Another “key” proposal under consideration, Adams said, would amend the penalty provision in the International Emergency Economic Powers Act to allow the U.S. to seek forfeitures of certain “facilitating property” associated with a violation, he said, and not just the direct proceeds from a particular offense.
“I think that the current crisis really puts a bright spotlight on a particular problem at a particular moment in history,” Adams said. “What we are looking to do is respond as robustly, as forcefully, as muscularly as possible to a particular crisis at a particular time.”
Although most lawmakers supported the proposals, Sen. Chuck Grassley, R-Iowa, questioned whether it was necessary for Congress to grant DOJ new authorities, saying he's concerned the new powers could be proven unconstitutional. “We run the risk of convictions being reversed and assets being given back to the very criminals who we’re seeking to hold accountable,” Grassley said.
But he supports revising the definition of racketeering, which could give prosecutors the “tools they need to secure” a conviction. “Whatever legislative changes we do must be calculated carefully to improve the current system overall without unnecessary litigation risks,” he said.
Other lawmakers said the proposals should be enacted as soon as possible. Sen. Lindsey Graham, R-S.C., said the legislation “fits the moment. It allows the Department of Justice to do things that the current law would not allow.” He also suggested the U.S. designate Russia as a state sponsor of terrorism, which would make it subject to certain sanctions and trade restrictions. “Russia is a mafia state,” Graham said, calling the legislation “much needed.”
Although the U.S. has laws that allow for certain seizures, existing authorities “do not give the U.S. government the flexibility and speed that the situation demands,” said Adam Smith, a former senior adviser in the Treasury Department's Office of Foreign Assets Control. Even though the U.S. has successfully seized some oligarchs’ yachts and planes, “what we don’t know about is how many of those assets have slipped through our fingers as the current bureaucratic and legal processes prove too slow or too cumbersome,” said Smith, a trade lawyer with Gibson Dunn.
“More must be done to augment the current authorities and improve their effectiveness in both denying bad actors funds and deterring bad activities,” he said.