Treasury unveils plan for further Russia sanctions

WASHINGTON — The Treasury Department plans to impose more than 500 new sanctions on Russia and its war machine today as the U.S. vows to keep up its financial pressure on Moscow with the war entering its third grueling year.

The sanctions represent the largest single tranche of penalties since Russia’s invasion of Ukraine on Feb. 24, 2022. They come on the heels of a series of new arrests and indictments announced by the Justice Department on Thursday that target Russian businessmen, including the head of Russia’s second-largest bank, and their middlemen in five separate federal cases.

The Biden administration is seeking to demonstrate its unwavering support for Ukraine, even though Republican lawmakers allied with former President Donald Trump are blocking vital additional U.S. military aid.

The planned sanctions were previewed by two administration officials who spoke on condition of anonymity before their release today. Additional sanctions are expected from the State Department as well.

Thousands of sanctions have already been imposed on Russian officials, businessmen, banks, companies and entire industries since the start of the war.

Out of the Justice Department, the cases announced Thursday include charges unsealed in New York against sanctioned Russian banker Andrei Kostin and “two of his U.S.-based facilitators.” The facilitators, Vadim Wolfson and Gannon Bond, were arrested Thursday.

Kostin, the longtime president of state-owned VTB Bank, is charged with engaging in a scheme to evade sanctions and launder money to support two superyachts. He, along with the two others, is also accused of trying to evade sanctions by concealing his ownership of a home in Aspen, Colorado. The indictment says Wolfson and Bond arranged to sell the house and provide Kostin with about $12 million from the sale.

The actions announced Thursday were spearheaded by the Justice Department’s KleptoCapture task force, which was formed in March 2022 to target Russian oligarchs as a main plank of the Western response to the invasion of Ukraine. To date, the task force has filed 70 criminal charges against individuals and five charges against corporate entities, while moving to restrain or forfeit approximately $700 million in assets, according to Deputy Attorney General Lisa Monaco.

U.S. officials, briefing reporters on Thursday, said roughly $6 million in seized Russian assets have been transferred to Ukraine, primarily for help with veterans of the war.

“Since the onset of Russia’s brutal and unprovoked invasion of Ukraine, the Justice Department has used every tool in our arsenal — including our international partnerships — to target the criminal actors and activity propping up Vladimir Putin, his henchmen, and his illegal war,” Monaco said in a statement.

Michael Khoo, a co-director of KleptoCapture, said on a call with reporters that the announcement was meant to send a message to Russian President Vladimir Putin that “we’re not going away” and “we can play the long game as well” so long as the war continues.

The KleptoCapture task force enforces the economic restrictions within the U.S. imposed on Russia and its billionaires.

The United States has been able to transfer more than $5 million of seized Russian assets to Europe in support of Ukraine’s defense, U.S. officials said Thursday. But the process of justifying each confiscation of alleged illicit assets in court is a painstaking one by law, playing out over years.

“The Justice Department is more committed than ever to cutting off the flow of illegal funds that are fueling Putin’s war and to holding accountable those who continue to enable it,” Attorney General Merrick Garland said in a statement.

The flurry of legal actions come as the United States looks for ways to respond to Putin over the sudden death last week of Russian opposition leader Alexei Navalny in an Arctic prison colony. White House officials said earlier this week that the administration will release new sanctions against Russia over Navalny’s death, although it is unclear how effective these financial penalties could prove. The United States has targeted Russia’s economy with economic penalties over the war in Ukraine for roughly two years, since the beginning of the invasion, and yet Russia’s economy grew substantially last year and is expected to continue to grow this year.

The U.S. and other allies of Ukraine had hoped to cripple and isolate Russia’s economy with a succession of sanctions targeting its financial sector and sources of revenue, including oil sales. But Putin has worked with Iran and others to blunt the impact of the international sanctions, so that the International Monetary Fund reports Russia’s economy growing at an unexpectedly healthy pace.

Some experts predicted that stringent U.S. penalties on Russian oligarchs would prompt them to turn on Putin and endanger his hold on power, but, at least so far, those hopes have not materialized. Washington has led its international allies in imposing a price cap on the sales of Russian oil, but some analysts say it must be more rigorously enforced.

“Sanctions against Russian oligarchs push in the right direction, but are not enough,” said Simon Johnson, an MIT economist. “The missing element is the enforcement of the Russian oil price cap, to really squeeze the Kremlin’s revenues

Also Thursday, an indictment was unsealed in Washington, D.C., charging Vladislav Osipov with bank fraud connected to operating a 255-foot luxury yacht owned by sanctioned Russian oligarch Viktor Vekselberg. Osipov, a Russian national, lives in Switzerland. The State Department has offered a reward of up to $1 million for information leading to his arrest or conviction.

The indictment identifies the super-yacht as the Tango, the first belonging to a sanctioned Russian with close ties to the Kremlin to be seized at the request of the U.S. government following Russia’s invasion of Ukraine.

In Florida, Serhiy Kurchenko, a sanctioned pro-Russian Ukrainian metals magnate, was indicted for trying to evade sanctions that prevent him from doing business in the United States. He and Kostin are believed to be in Moscow and thus unlikely to face U.S. justice.

Also in Florida, a civil forfeiture complaint was filed against two luxury condos located at the Ritz Carlton in Bal Harbour owned by sanctioned Russian businessman Viktor Perevalov, the co-owner of a Russia-based construction company that was sanctioned for building a highway in Crimea, a Ukrainian peninsula that Russia seized in 2014.

And in Georgia, Feliks Medvedev pled guilty earlier this month to helping launder over $150 million on behalf of Russian clients through bank accounts he controls. Medvedev, a Russian citizen, lives in Buford, Georgia.