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The Financial Crimes Enforcement Network warned financial institutions against efforts by kleptocratic regimes and corrupt public officials to launder their illicit gains, and cited Russia as a particular area of concern.
The U.S. Treasury Department’s anti-money-laundering unit in an advisory Thursday urged banks and other financial institutions to focus their efforts on detecting the proceeds of foreign public corruption, which could potentially be laundered through shell companies, offshore financial centers and professional service providers, according to the statement.
FinCEN said kleptocrats use their positions of power and influence to steal the public’s wealth for personal gain and to enrich their networks of corrupt actors, which erodes public trust and harms the most vulnerable ones in societies. Foreign public corruption can also violate U.S. law, the Foreign Corrupt Practices Act.
The U.S. government has long expressed concerns about Russian kleptocracy. Russia deserves particular attention, FinCEN said, because the country serves as a “nexus” of public corruption, sanctions evasion, money laundering and malign activities abroad. FinCEN cited as an example the Kremlin’s recent invasion of Ukraine, where many of Russia’s elites and oligarchs who control much of Russia’s economic interests supported and enabled its actions there.
“Russia’s further invasion of Ukraine is yet another example of how a kleptocracy like Russia…harms not only its own citizens, but those living beyond its borders,” FinCEN Acting Director Himamauli Das said in a statement. “Financial institutions play a crucial role in identifying corrupt activity and associated money laundering on the part of foreign public officials and should remain vigilant and promptly report suspicious financial activity.”
The advisory, which provides potential red flags associated with kleptocracy and other forms of foreign corruption, comes as President Biden named countering corruption as a core U.S. national security issue.
As part of the efforts, the Treasury last month launched the Kleptocracy Asset Recovery Rewards Program, which offers payments for tips leading to seizure or forfeiture of assets linked to foreign government corruption, including those linked to the Russian government.
The advisory also comes as the U.S. ratchets up pressure on Russian oligarchs. U.S. and Spanish authorities earlier this month seized a $90 million super yacht in Spain that they said is owned by a sanctioned oligarch with close ties to Russian President
Vladimir Putin,
the first seizure of its kind.
Write to Mengqi Sun at mengqi.sun@wsj.com
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