Interview with Andrew Adams about Task Force KleptoCapture and on fighting transnational organized crime, economic countermeasures and asset forfeiture

September 30, 2023

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The Interview:

Can you please provide a little bit of background on your most recent roles and what led to taking those positions?

My final roles at the Department of Justice were heavily focused on national security issues. I held the role of acting Deputy Assistant Attorney General for the National Security Division for six months, and during that time, and for the preceding year, I also acted as the Director of the Department’s Russian Sanctions and Export Control Task Force – Task Force KleptoCapture. Each role involved a focus on U.S. and allied economic countermeasures to address the most recent Russian invasion of Ukraine.

Specifically, what led to my taking those positions was the illegal invasion of Ukraine in February 2022 and the global reaction against that war of aggression. The Task Force was set up in direct response to that invasion and as a way of surging resources and focusing efforts on the enforcement of U.S. and allied economic countermeasures – sanctions and export controls – designed to stymie the funding and resupply of the Kremlin and its military apparatus.

More broadly, I came to these roles through my background as a federal prosecutor focusing on the nexus of money laundering and transnational organized crime. In that capacity, I took an interest in using the federal civil forfeiture authorities as a means of attacking corruption in, and corruption of, U.S. markets – including the art market. The combination of those roles – focusing on money laundering, sanctions, and forfeiture – met the moment when the Task Force was initially created.

In mid-July I finished my run at the Department of Justice in and joined the partnership at Steptoe – a law firm that I came to know through my work at DOJ for its expertise in international investigations and matters of economic countermeasures and asset forfeiture.

What was the mobilizing factor to involve you in this line of work?

I have a deep interest but zero talent or working background in art! I once took a photo that I thought was kind of cool, I suppose. But any specialization, including a specialized prosecutorial practice, requires a commitment to a field, a community, and an ideal. Among other interests, I was motivated to use my position as a prosecutor in defense of cultural patrimony and in defense of the vibrancy, integrity, and freedom offered through the arts. That motivation is critical to building complex and often long-running investigations, so I would say that the importance is quite high.

Can you speak a bit about how the DOJ works with other departments and entities to collectively act on mitigating the devastation of Ukrainian art and culture?

The Department’s focus on enforcing sanctions and export controls related to the Russian invasion is designed to bolster the global reaction against that aggression and, in the long term, to stymie the war that threatens Ukraine and Ukrainian culture. When I was at the DOJ, we worked hand-in-glove with other agencies across the United States Government, including the Treasury Department, State Department, intelligence services, and all manner of law enforcement agencies, to further that core mission. At the same time, I expect that one priority for the DOJ and its prosecutors around the country will remain the identification, seizure, and return of looted cultural property. The DOJ works closely with public and private institutions – Ministries of Culture and auction houses, for example – in pursuit of those cases.

Task Force KleptoCapture

The Task Force was announced on March 2nd, 2022 by the Attorney General, with a mission of enforcing sweeping sanctions and export restrictions as well as counter economic hits that the United states and other allies and partners of the U.S. have imposed as a result of Russia’s invasion of Ukraine. Please describe the makeup of the Task Force and how much of the team’s work dealt with art, cultural property, and other collectibles?

From the outset, the Task Force comprised attorneys from across the DOJ, particularly drawing on Assistant United States Attorneys (AUSAs) across the country and trial attorneys from the Money Laundering and Asset Recovery (MLARS) and the Counterintelligence and Export Control Sections (CES) of “Main” Justice in Washington. Apart from the attorneys, we had the support and participation of dedicated FBI, Homeland Security Investigations, IRS, and Postal Inspection Service agents, all focused on cases developed and supported by the Task Force.

Many of our cases focused on sanctions evasion by designated oligarchs, and, to that extent, involved deep investigation of personal finances and asset tracing, which included investigations of fine art. In situations where artworks represented property obtained through criminal activity, or was used as a means of facilitating a money laundering or sanctions evasion scheme, that property could be subject to seizure and forfeiture.

Is there a precedent for the work of this Task Force? And if so, what models were used for this Task Force?

The DOJ has long devoted resources to combating corruption and kleptocracy as well as transnational sanctions evasion networks. The Kleptocracy Unit of MLARS has a strong record in each respect, and we drew on their expertise and abilities to build the Task Force. What was unprecedented, in my view, was the breadth of international cooperation that the Task Force received following the invasion in February 2022. That aspect of our work with foreign partners allowed us a cross-border reach at a remarkable speed and scale.

Please describe what if any collaboration the Task Force engaged in with its foreign counterparts, for example in the UK, or the European Union or Ukraine?

It is no exaggeration to say that every action that we took during my tenure with the Task Force – every arrest, every seizure – required a significant degree of international cooperation. Chief among the partners in that work were our friends in UK and European law enforcement agencies and our counterparts in Ukraine.

Do you have art experts working on the Task Force? If so, do they work as part of the team or do they work as outside advisors/consultants?

In appropriate cases, the DOJ would consult with or hire outside experts of all stripes, including experts in art appraisal or assessment. There are also agents within US law enforcement with significant expertise in the field, including the special agents of the FBI’s Art Crime Team.

Please describe the process of freezing assets of sanctioned persons? What does it mean for the art market participants — agents, dealers — when approached by the persons on the list or their representations? What about their family members?

From the DOJ enforcement perspective, and assuming the application of the broadest category of sanction, the upshot of a designation is that U.S. persons or corporations – including family members or art market participants – take on enormous risk if they transact in the property of that designated person. Similarly, non-U.S. persons take on the same risk of investigation or prosecution if they conduct such transactions in the U.S., using U.S. financial rails, or through U.S.-based companies.

In the indictment of Graham Bonham Carter, for example, one of the allegations related to the attempted movement of artworks sitting in the United States by a non-U.S. person residing outside of the United States. Despite the citizenship and location of that defendant, the charges are founded on the U.S.-nexus of the property itself.

How much input can you give to OFAC to add new names to the list of sanctioned persons?

The primary authority for designation lies with the Treasury or, in some cases, the State Department. The DOJ and other agencies play a role in consulting on designations, but the DOJ’s primary role is ultimately to enforce those designations in the event of a willful violation.

With new individuals and corporations being added to the list of sanctioned persons, or to the Commerce Department’s Entity List, what does it mean for the Task Force’s work?

There is certainly not a lot of downtime for the Task Force team! The Department has been clear about targeting priorities as the Task Force has matured – even at the outset, one area of focus was on investigation of “facilitators,” that is, companies or individuals who take a professional stake in assisting others, including sanctioned oligarchs, to move money or controlled goods in violation of U.S. law. I expect that kind of prioritization to continue.

It is also the case that the National Security Division – a key contributor to the Task Force’s personnel and success – has been ramping up hiring and enforcement efforts touching on corporate crime. As those prosecutors come into the Division, you can expect that sanctions and export control cases touching on corporate liability, and cases involving sanctioned corporations, will become a focus for the Task Force and the Department.

In October 2022, ArtNet reported that a British citizen, Graham Bonham-Carter, was indicted for, among other things, attempting to move a work of art belonging to Oleg Deripaska from the United States into the United Kingdom. In your opinion, is this an exception to the rule or are there still many efforts to help circumvent sanctions?

In one sense it is an exceptional case – in my experience, most people and most companies truly want to comply with the law and, moreover, to do their part in rejecting and denouncing the illegal invasion of Ukraine. In another sense, however, it is of a piece with a still too large economy of money laundering and sanctions evasion that persists in pockets of the world. That’s what has kept the Task Force busy and, I suspect, will continue to do so.

Please describe the process of freezing or seizing property and forfeiting it.

In the United States there is a stark divide between what is commonly called a “freeze” or a “block” of property, on the one hand, and the seizure and eventual forfeiture of property, on the other.

A “freeze” or a “block” tends to refer to an action by OFAC or the State Department to designate a particular person or entity, or to ban the transfer or physical movement of property of a designated person or entity.

A seizure, on the other hand, requires probable cause – usually found by a federal judge – that a particular property is forfeitable on some basis, whether as the proceeds of certain crimes or as property involved in money laundering, for example. That finding often results in the issuance of a seizure warrant, which goes beyond a mere “freezing.” At the point of the warrant’s issuance, the Government is permitted to take possession and control of the property in question. Typically, that is the beginning of a lengthier process that will result in forfeiture of the property – the final and permanent divestiture of interests in the property other than in favor of the United States. That forfeiture process may be in the form of a civil suit by the Government, or it may come as part of a sentencing proceeding in a criminal matter. In either case, third parties (for example, innocent owners or bona fide purchasers of the property) will have an opportunity to set the forfeiture aside through the court proceedings.

Did the Task Force receive tips from the members of the trade or disgruntled colleagues about the location of art collections subject to seizure and perhaps forfeiture?

During my tenure, we were in close contact with private companies, whistleblowers, confidential sources, and all manner of researchers to determine precisely that. The outpouring of support and assistance from all corners of the economy – the art market included – was tremendously important in the Task Force’s early days.

Does it matter that a sanctioned person can transfer property to their family or associates and thus circumvent the regulations?

A transfer of “blocked” property following the implementation of a sanction is void; such a post-sanction transfer would not convert blocked property into unblocked property. Indeed, it certainly matters in the sense that such a transfer would raise the prospect of a willful violation of the relevant sanctions, not to mention civil penalties from OFAC.The consequences of such a post-sanction transfer can be severe.

Can you address the issue of different countries imposing sanctions at different times against same people and how does that affect international enforcement and synchronized efforts?

There is a great amount of overlap between various sanctions regimes at this point, including between the United States, the United Kingdom, and the European Union and its member states. That kind of correspondence between systems of sanctions can ease investigations across borders, and extraditions between countries, by ensuring that acts that are illegal in one jurisdiction will be recognized as illegal in another. That concept – called “dual criminality” – allows for a country to swiftly act on requests from allies through mutual legal assistance treaties, for example, or on the basis of requests sent directly by U.S. law enforcement agencies to their local counterparts.

What happens, or will happen with, the proceeds from the sale of forfeited property?

One of the achievements of the Task Force’s first year was working with attorneys across the Department and with Congressional Representatives, Senators, and their staffs to craft a bill that streamlined the ability of the United States to make certain fully forfeited funds available for the benefit of Ukraine. That bill passed at the end of 2022 and was almost immediately put to use in January of 2023 with the initial authorization of such a transfer by Attorney General Garland. There are opportunities to expand that authority to include proceeds of additional crimes, such as those stemming from violations of export controls, and I expect the Task Force will continue to push hard to finalize forfeitures to take advantage of the existing authority.

Are there plans to turn over art instead of proceeds from art sales to Ukraine to add to their national collections that have been severely affected by the war looting?

As of the time I left, there were no artworks finally forfeited. That said, the authority does not require any particular form of a transfer – the State Department, in coordination with Justice, Treasury, and of course Ukraine, very well could use the authority for that purpose and in that form should the opportunity arise.

Who is behind the concept of turning these proceeds to Ukraine for reconstruction purposes?

My belief is that everyone involved in this effort – from State, Treasury, Justice, the law enforcement agencies, Congress, and the White House – have had that concept in mind from the absolute outset.

What kind of assistance did you receive and would expect the Task Force to receive from the high-value art market?

We received significant support in the form of information sharing, rapid response to requests for data and documentation, and a firm sense of commitment from major firms that such efforts would continue. As mentioned, most of the world wants this effort to succeed; most of the world wants their businesses to bring comfort, safety, and integrity to bear in all of their dealings – and the art market is no different in that respect. Aspects of the market require heightened diligence, both by its participants and by the Task Force, to keep to those ideals, but with a market filled with people of good faith and high capability, there is always cause for optimism.