U.S. Targets Smuggling and Money Laundering Networks Supporting Russia’s Regime

Published: 02 March 2023

US Justice Dpt copyU.S. Justice Department imposed a new wave of sanctions. (Photo: Scott, Flickr, License)

By Vinicius Madureira

The U.S. Department of Justice filed two separate cases against a Russian oligarch, in its latest efforts to disrupt money laundering and smuggling networks which support the Russian regime’s war in Ukraine.

One of them was a civil forfeiture complaint against six real estate properties worth US$75 million, beneficially owned by Russian oligarch Viktor Vekselberg. The second case saw Russian national Ilya Balakaev charged with various offenses related to smuggling sensitive devices used in counterintelligence operations from the U.S. to Russia.

Prosecutors claim that Vekselberg’s properties had been obtained through international money laundering and sanctions violations.

The properties are located in New York, Southampton and Fisher Island, Florida, and were said to be owned by Vekselberg and his associate, Vladimir Voronchenko, who was similarly indicted earlier this month. The funds raised from the forfeitures will be used to help rebuild Ukraine.

Balakaev, meanwhile, was charged with multiple offenses, including smuggling counterintelligence devices from the U.S. to Russia, violating sanctions against Russia, and providing U.S. technology to a North Korean government official.

If convicted, he could face up to 75 years in prison. He is currently listed as a fugitive.

Over the past year, the U.S. government has seized over $500 million in assets belonging to Russia’s oligarchs and those who have unlawfully supported the Russian regime. Additionally, over 30 individuals and two corporate entities have been indicted for crimes such as sanctions evasion and money laundering.

Last Friday, the U.S. Department of the Treasury announced a new wave of sanctions against Russia’s metals and mining sector, in order to hinder the country’s resupply efforts in its costly ground war against Ukraine.

These measures, coordinated with the U.S.’s allies and G7 partners, were taken with the expressed purpose of isolating Russia from the global economy. As a result, Russia’s financial sector has lost hundreds of billions of dollars.

Since the beginning of the war, the U.S., along with a coalition of over 30 allies and partners, has imposed a range of economic measures, including sanctions, export controls, and price caps.

Thousands of individuals and entities linked to the Russian regime have been blacklisted, including senior government officials and military manufacturing firms. Over 1,000 foreign companies have scaled back or stopped their operations in Russia, stifling the country’s investment and industrial growth.

G7+ price caps on Russian-origin oil and petroleum products have aimed to reduce Russia’s capabilities to fund its war and maintain its energy markets. A cap of $60 per barrel for Russian crude oil was implemented by the EU, the G7, and Australia last December.

Russian oil revenues in January 2023 were nearly 60% lower than reported figures in March 2022, according to the country’s Ministry of Finance.