Justice Department Announces Launch of Task Force “KleptoCapture” focused on Russia-related Sanctions Violations

On March 2, 2022, the U.S. Department of Justice announced the launch of Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the unprecedented sanctions, export, and other measures taken by the United States in response to Russia’s military invasion of Ukraine. Task Force KleptoCapture will enforce the punitive sanctions, export restrictions, and economic countermeasures the United States has used to isolate Russia from the global market, target Russian officials and government-aligned elites, and burden the country with serious costs for its actions.

Task Force KleptoCapture’s mission reflects a whole-of-government campaign to put pressure on the Russian government—a theme echoed in President Biden’s State of the Union address. The announcement—not to mention the name of the Task Force—makes clear that special focus will be applied on Vladimir Putin’s inner circle: oligarchs who have influence on Putin and are most likely to be in a position to influence Russian policy. It is also a clear signal that the DOJ intends to aggressively enforce Russia-related sanctions.

The Task Force

Task Force KleptoCapture is headed by the Office of the Deputy Attorney General and will be staffed with prosecutors, analysts, and professional staff across the DOJ, including experts in economic sanctions and export control, anticorruption, asset forfeiture, anti-money laundering, tax enforcement, national security investigations, and foreign evidence collection.

The Task Force’s mission includes:

• investigating and prosecuting sanctions violations;
• combatting attempts to circumvent the restrictions placed on Russian financial institutions;
• targeting the use of cryptocurrency to avoid sanctions; and
• using civil and criminal asset forfeiture authorities to seize assets belonging to sanctioned individuals, or proceeds from unlawful conduct.

The Task Force has a broad ambit and is authorized to investigate and prosecute any criminal offense relating to its mission.

The creation of this mission-driven group demonstrates the U.S. government’s sense of urgency to respond to Russia’s aggression: the Task Force will likely serve as an accelerant, focusing resources and staff and keeping the Department’s high-level attention on relevant investigations and disruptions. It signals the fact that DOJ is looking for ways to quickly change the Russian government’s risk-reward calculus by bringing to bear the legal authorities and resources at the DOJ’s disposal.

The Task Force is also consistent with and reflects other DOJ initiatives, such as the Cryptocurrency Enforcement Framework and the establishment of the National Cryptocurrency Enforcement Team (NCET) (discussed in our prior alert). The Task Force adopts many of the priorities of the Framework, setting goals to prosecute those who would attempt to evade anti-money laundering measures, circumvent U.S. sanctions, launder proceeds of foreign corruption, or, currently, avoid the impact of the United States’ response to Russian military aggression.

Considerations in Light of the Task Force’s Development

The Task Force highlights the importance for organizations to have an effective compliance program in place and to keep track of the regulatory landscape as it continues to change.

If violations of the new sanctions or export controls against Russian entities are discovered internally, companies should carefully consider whether to avail themselves of voluntary self-disclosure (VSD) mechanisms. Guidance issued in December 2019 (the “VSD Policy”) cleared up the incentives for companies that self-report sanctions and export control violations, including a presumption that such companies will receive a non-prosecution agreement (NPA) and limits on any monetary payment to an amount equal to the gains from the illegal conduct—absent aggravating factors. Recently, the German software company SAP SE (SAP) entered into a NPA with DOJ for $8 million after SAP became the first company to voluntarily disclose U.S. export and sanctions violations under the recent VSD policy (covered in our prior client alert). As part of the resolution, SAP was required to disgorge $5.14 million of ill-gotten gains, but the DOJ did not prosecute SAP or seek any additional penalty amount.

Organizations should recognize the growing value the U.S. government has placed on public-private sector cooperation through steps like promulgating the VSD Policy and now the Task Force, which will draw on information from private sector partners to execute its mission. Private sector cooperation is a crucial part of the U.S. government’s strategy to enforce sanctions and export control laws. As a result, voluntary disclosure will remain an important backstop for companies that stumble into sanctions or export control violations.

Conclusion

The creation of Task Force KleptoCapture is reflective of the U.S. government’s sense of urgency to respond to Russia’s act of military aggression and is consistent with prior initiatives to counter corruption and evasion of U.S. authorities, including sanctions and export controls. Organizations will do well to keep track of the Task Force’s actions to see if any particular enforcement priorities become clear. Organizations must also take swift steps to ensure that their compliance functions remain robust and up to date in this volatile state of global affairs.