Treasury's Financial Crimes Enforcement Network noted in the alert Wednesday that Russian elites, family members and their associates could use "high-value" items — including real estate, artwork, precious metals, jewelry, vehicles and yachts — to evade sanctions levied against them in response to the Russian invasion of Ukraine.
Real estate may offer an "attractive vehicle for storing wealth or laundering illicit gains" due to its high value, potential for appreciation, and potential to hide ownership through "layered and opaque transactions," while the "mobility, concealability, and subjective value" of artwork makes it additionally vulnerable to sanctions evasion, FinCEN said.
The alert lays out dozens of red flags that financial institutions should be on the lookout for and potentially report to the department.
For instance, shell companies are often used to purchase, hold or sell real estate, fine art and other items, FinCEN said, urging banks to peel back the layers of potential transactions made by such entities.
Banks should examine if the transactions appear to be far above or below fair market value, and alarm bells should also go off if a Russian individual or entity requests a wire transfer from a non-U.S. bank to pay for an all-cash purchase of the assets, FinCEN noted.
Regarding precious metals, stones and jewels, banks should be leery of high-value or frequent transactions involving mining operations with "opaque and complex corporate structures," while transactions related to Russian transportation service companies could indicate the potential illicit transfer of vehicles and yachts.
Along with Wednesday's alert, Treasury announced the launch of the Kleptocracy Asset Recovery Rewards Program, which is aimed at seizing "stolen assets" linked to foreign government corruption and the proceeds of such corruption.
"The program's initial rewards will target the recovery of assets stolen by elites and their associates linked to the Russian government," FinCEN said.
While the maximum amount of any reward is $5 million, the Treasury secretary can personally authorize a greater amount if the case merits it, according to the department's website.
As defined by U.S. law, "stolen assets" are financial assets within the U.S. "constituting, derived from, or traceable to, any proceeds obtained directly or indirectly from foreign government corruption," the website notes.
The Biden administration has levied a slew of sanctions against Russian banks, entities and individuals since its invasion of neighboring Ukraine. Early this month, Biden announced the government's intent to identify and freeze the assets of sanctioned Russian elites and family members, including their yachts, luxury apartments, money and other ill-gotten gains. This was followed by a March 11 ban on imports into the U.S. of goods from various sectors that are vital to the Russian economy.
Wednesday's alert follows another warning from FinCEN last week that Russian entities could try to sidestep the sweeping sanctions using digital currencies.
--Editing by Daniel King.
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