On December 29, President Biden signed the Anti-Money Laundering (AML) Whistleblower Improvement Act into law. The Act is a landmark piece of anti-corruption that, in addition to strengthening AML whistleblower protections, expands the AML Whistleblower Program to cover whistleblowers disclosing violations of U.S. sanctions.
Since the AML Whistleblower Improvement Act became law, the U.S. Department of Justice (DOJ) has announced a number of charges against individuals who allegedly violated U.S. sanctions against Russia.
On January 20, the DOJ announced charges against two businessmen, Vladislav Osipov, a Russian national, and Richard Masters, a United Kingdom national, for allegedly facilitating a sanctions evasion and money laundering scheme concerning the Tango, a $90 million, 255-foot luxury yacht owned by sanctioned Russian oligarch Viktor Vekselberg.
According to the DOJ’s indictment, “despite U.S. sanctions issued against Vekselberg in April 2018, Osipov and Masters facilitated the operation of Tango through the use of U.S. companies and the U.S. financial system, attempting to obfuscate Vekselberg’s involvement in the vessel. Osipov, an employee of Vekselberg who functioned as a property manager for Tango, designed a complicated ownership structure of shell companies to hide Vekselberg’s ownership of the yacht, despite that Vekselberg designed the yacht, was the sole user, and was the ultimate beneficial owner.”
“Facilitators of sanctions evasion enable the oligarchs supporting Vladimir Putin’s regime to flout U.S. law. The United States will not allow its financial institutions and persons to be manipulated or defrauded for the purposes of benefitting those supporting an illegal war,” said U.S. Attorney Matthew M. Graves for the District of Columbia.
On January 23, the DOJ announced charges against Charles F. McGonigal, a former Special Agent in Charge of the FBI New York Counterintelligence Division, and Sergey Shestakov, a former Soviet and Russian diplomat. The DOJ charged the men with violating U.S. sanctions against Russian oligarch Oleg Deripaska.
“In 2021, McGonigal and Shestakov conspired to provide services to Deripaska, in violation of U.S. sanctions imposed on Deripaska in 2018,” the DOJ claims. “Specifically, following their negotiations with an agent of Deripaska, McGonigal and Shestakov agreed to and did investigate a rival Russian oligarch in return for concealed payments from Deripaska. As part of their negotiations with Deripaska’s agent, McGonigal, Shestakov and the agent attempted to conceal Deripaska’s involvement by, among other means, not directly naming Deripaska in electronic communications, using shell companies as counterparties in the contract that outlined the services to be performed, using a forged signature on that contract and using the same shell companies to send and receive payment from Deripaska.”
The defendants in both cases face money laundering charges as well as sanctions evasion charges. Under the AML Whistleblower Improvement Act, individuals who voluntarily provide U.S. authorities with original information on sanctions and money laundering violations can qualify for whistleblower awards of 10-30% of the funds collected by the U.S.
In a recent article for Reuters, leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto explains how the AML Whistleblower Improvement Act is a “game-changer” in the fight against Russian corruption.
“Although the AML Whistleblower Improvement Act broadly covers violations of both money laundering and sanctions requirements, the ability to use this law immediately to enforce all of the financial restrictions placed on Russia after the invasion of Ukraine was the driving force behind its passage,” Kohn writes.
“The hidden gem within the AML Whistleblower Improvement Act was its ability to incentivize whistleblowers from inside Russia and Russia’s trading partners,” Kohn continues. “Given the law’s transnational reach, citizens from countries with financial or trade relations with Russia will have the ability to safely and effectively blow the whistle and help U.S. authorities seize sanctioned Russian wealth.”
Arrest and Criminal Charges Announced Against British and Russian Businessmen for Facilitating Sanctions Evasion of Russian Oligarch’s $90 Million Yacht | OPA | Department of Justice
Former Special Agent in Charge of the FBI New York Counterintelligence Division Charged with Violating U.S. Sanctions on Russia | OPA | Department of Justice
New AML Law Seen as a “Game Changer” in Fight Against Russian Corruption