Los Angeles Times
Can the U.S. sell off seized Russian assets?
Biden wants to use oligarchs’ pricey possessions to rebuild Ukraine. He’s asking Congress to help.
WASHINGTON — President 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 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.
What legislation is Congress considering?
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 be used only for specific purposes.
The package that Biden sent to Congress goes further, creating a new criminal offense: It would make it unlawful for anyone to knowingly own proceeds directly obtained from corrupt dealings with the Russian government. Property used to facilitate sanctions violations would also be eligible for seizure.
The White House says the tools would make sanctions more difficult to evade and said it wants to use the money “to remediate harms of Russian aggression toward Ukraine.”
Why does the government need legislation?
Under 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 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 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 [the oligarchs] absolutely will.”
How much has been seized so far?
The White House says the Treasury Department has sanctioned and blocked vessels and aircraft worth more than $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, Himamauli Das, acting director of the Treasury Department’s Financial Crimes Enforcement Network, said the agency has received 2,000 reports of suspicious activity connected to Russian oligarchs. Of those, 271 were forwarded to intelligence and law enforcement and the Treasury’s sanctions arm.
How can the money from seized assets be used?
Among other proposals, the administration’s package would extend the statute of limitations of money laundering investigations based on foreign crimes from five years to 10 years, add sanctions evasion to the definition of “racketeering activity” in the Racketeer Influenced and Corrupt Organizations Act and 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, in which confiscated funds could be used only 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, within two years of the bill’s enactment, the administration could seize assets only 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 liquidating and using the funds could take years.
What about Russian Central Bank assets?
The package Biden sent to Congress does not address Russian Central Bank assets. However, Russia’s foreign reserves of more than $600 billion have been frozen by the U.S. and its allies.
Treasury Secretary Janet L. 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.” She added that this would have to be done in consensus with U.S. allies and partners.
In a virtual address last week to leaders of the International Monetary Fund and the World Bank, Ukrainian President Volodymyr Zelensky said the proceeds of sanctioned property and Russian Central Bank reserves should be used to compensate Ukraine for its losses.
What about proceeds from corrupt dealing?
The Justice Department and Treasury are already targeting the assets of Russian oligarchs who they say have evaded sanctions, including a 254-foot yacht owned by an oligarch with close ties to Russian President Vladimir Putin.
Atty. Gen. 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 obtain a seizure warrant from a federal judge. The U.S. government would then need to pay to maintain, transport and dock the yacht until it can be sold off at auction.
The proceeds from the sale would flow into the Justice Department’s asset forfeiture fund.
The government wants to use some of the forfeiture funds to support Ukraine, though the current law doesn’t easily allow for that, Garland said April 26 at a House subcommittee hearing.