Key Takeaways
- Task Force KleptoCapture, a Department of Justice (DOJ) initiative created to enforce sanctions on Russia and facilitate asset forfeitures, was recently disbanded by Attorney General Pam Bondi.
- While KleptoCapture struggled to effectuate forfeitures and provide revenue for Ukraine, it has been instrumental in furthering broader U.S. counterproliferation objectives with Russia and other countries.
- The end of KleptoCapture does not mean the end of the Russia sanctions regime. Nor does it signal any relaxation of criminal and civil enforcement. Sanctions and export controls, as well as other national security and foreign policy measures, are likely to remain often-used tools of U.S. national security policy during the Trump administration.
Overview
On February 5, 2025, the new Attorney General announced the disbanding of Task Force KleptoCapture, which was launched in March 2022 to enforce the sweeping portfolio of sanctions against Russia. KleptoCapture was part of an international effort to offset the cost of financing Ukraine’s defense and to pressure Russia into ending the war. It provided a centralized and politically influential mechanism to catalyze civil and criminal forfeiture actions to seize funds and assets belonging to sanctioned Russian individuals, colloquially known as “oligarchs,” liquidate them and provide the proceeds to Ukraine.
This proved to be difficult in practice, since merely freezing an asset does not give the government the right to take ownership and sell it. Rather, U.S. law requires that federal prosecutors prove that an asset is owned by a sanctioned entity – a difficult process due to the use of opaque, layered shell companies – and that the sanctioned individual or entity committed a federal crime. This is a complicated process that can take years, routinely involving both criminal and civil litigation. It is also costly, since while such litigation is pending the government is required to pay for the maintenance of any frozen or seized assets. Not surprisingly, only a small number of seized assets have been liquidated and their proceeds provided to Ukraine.
However, KleptoCapture provided an important platform for prosecutors around the country to target and dismantle the transnational networks that smuggle, directly and indirectly, military technology and dual-use items from the U.S. and other western countries to Russia. These investigations and prosecutions have helped cripple Russia’s ability to replenish stockpiles of semiconductors and other dual-use items necessary to sustain its war effort, while simultaneously denying Russia access to cutting-edge technologies—such as those used in hypersonics, quantum computing and advanced artificial intelligence – that could spur its research and development efforts. KleptoCapture helped prosecutors leverage state-of-the-art investigative techniques and fostered unprecedented public-private partnerships involving law enforcement, the intelligence community, regulatory authorities and the financial sector. This allowed prosecutors to obtain bank records and other critical overseas evidence that had previously been unavailable.
What’s Next for Russia Sanctions?
It would be a mistake to read too much into the dismantling of KleptoCapture. There is no question that criminal and civil enforcement of Russia sanctions will remain a priority until a detente is reached in Ukraine. The Trump administration has already confirmed as much, threatening to increase sanctions on Russia in a variety of areas, including Russia’s lucrative oil and gas sector. The administration’s broader focus on economic measures such as sanctions, export controls and tariffs to further its national security and foreign policy agenda also suggests continued enforcement. Indeed, the President has already issued executive orders instituting tariffs, and Howard Lutnick, who is likely to be confirmed as the next commerce secretary, has stated that he “intend[s] for strong enforcement of export controls to be a hallmark of [his] tenure” and that he is “committed to making any necessary changes to prevent malign actors from exploiting America’s innovation ecosystem.”
Further, the architecture for criminal enforcement remains in place and Attorney General Bondi has given no indication that active investigations will be dropped or suspended, or that new cases cannot be initiated or charged. Significantly, the Disruptive Technology Strike Force (DISTECH), an interagency group pairing the Federal Bureau of Investigation (FBI), the Department of Homeland Security (DHS) and the Department of Commerce (DOC) with federal prosecutors in more than 10 cities, remains intact and focused on the same counterproliferation objectives as KleptoCapture. Law enforcement squads responsible for Russia sanctions and counterproliferation have, at present, remained unscathed amid the changes at the DOJ.
Conclusion
As long as the war in Ukraine rages on, the U.S. will seek to prevent American and western dual-use items and other technologies from being weaponized and used on the battlefield. As such, we expect to see the continued aggressive use of sanctions, export controls and tariffs. Such measures will also be used to achieve broader U.S. national security objectives and respond to a range of future threats from Russia, China and elsewhere. The Secretary of Commerce designee’s statement that export enforcement will be a hallmark of his tenure is significant given the agency’s dual regulatory and criminal enforcement role.
Accordingly, continued care should be taken to comply with sanctions for the 300 or so U.S. companies still in the Russian market – mostly in the food, agro-chemical and pharmaceutical industries; the U.S. and foreign companies selling and exporting high-priority goods sought by Russia; and the hundreds of European companies that operate in Russia. The broad extraterritorial reach of U.S. sanctions, export controls and related national security laws and regulations can capture transactions with very little nexus to the United States, including U.S. dollar-denominated transactions between foreign parties and foreign persons engaged in activities involving foreign-produced items developed from U.S. technology or produced by U.S production equipment.
Any business seeking to enter the Russian market, resume operations in Russia, or simply conduct business, directly or indirectly, with third parties that may do business in Russia or with Russian entities should have a robust compliance program to minimize potential exposure for civil or criminal sanctions violations as well as consider the reputational risk of doing so.
[View source.]
