Time to use the Patriot Act against Putin’s Russian elite

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In the words of Alexei Navalny, “It’s really simple. Putin is without a doubt the wealthiest person in the world … You want to influence Putin, then influence his personal wealth … Everybody knows the names of the oligarchs and friends of Putin who hold his money.”

Just where do they hold this wealth?

Offshore.

One favorite locale: “Moscow on the Med,” a.k.a. Cyprus.

Bill Browder has testified about plundering plutocrats and corrupt government officials who facilitated the movement of massive amounts of Russian monies to the safety of banks offshore via shell companies — and then reinvested into mega mansions in London, luxury apartments in Monaco and Miami, soccer teams throughout Europe and super yachts anchored in Malta, after a thorough laundering of their tainted origins.

Sure, the Treasury Department could apply sanctions against the top 50 or so Russian oligarchs … again.

But if you truly want to hit the Russian elite with severe economic consequences and not mess with the little people, hit them where it hurts: bank accounts held offshore in Cyprus.

Want to deal serious economic consequences to some of the world’s biggest most egregious money launderers? Apply the so-called “Money Laundering Death Penalty” to the entire jurisdiction of Cyprus.

The U.S. Treasury should declare Cyprus a jurisdiction of “primary money laundering concern.” Western Banks would cease transacting with banks within such a jurisdiction.

How is that possible?

Section 311 of the USA Patriot Act empowers the Director of FinCEN to declare individual international banks — or jurisdictions — to be of “primary money laundering concern” and cut them off from interactions with the Western banking world.

FinCEN activated this lethal banking weapon a few years ago against the Foreign Bank of the Middle East (FBME), which happened to be located on Cyprus. FinCEN could do it again — but it doesn’t have to stop with individual financial institutions. It has the authority to declare the whole island of Cyprus a jurisdiction of concern.

What would be needed to justify such a potent action by FinCEN?

In the FBME action, FinCEN cited a host of Suspicious Activity Reports (SARs) related to the bank. Could they not do so again with just about any bank on Cyprus, if properly motivated?

A leaked audit report in 2013 reportedly noted that 75 percent of all accounts in stricken Cyprus banks were of the shell company variety, created by so-called “introducer structures.” BBC reported in 2013 that “it is estimated that one half to a third of all Cyprus bank deposits are of Russian origin.” An Al Jazeera article published in 2020 recounted how “the Cyprus Papers revealed that in just two years 1,000 wealthy Russians bought ‘golden passports’ from Cyprus and turned the country into ‘Moscow on the Med.’”

FinCEN ought to have SARs to support those assertions of Cyprus money laundering within its databases.

Based on the stellar work of the International Consortium of Investigative Journalists (ICIJ) noting the disproportionate use of shell companies by Russian nationals as well as use of shell account bank activity in Cyprus, and the recent fines assessed by the Central Bank of Cyprus against the largest bank there for Anti-Money Laundering (AML) breakdowns, one would expect FinCEN to have plenty of them.

Joe Biden could pick up the phone and query Treasury Secretary Janet Yellen — task FinCEN to confirm or deny such an assertion. An affirmation could quickly lead to activation of section 311 of the USA Patriot Act designating Cyprus a jurisdiction of primary money laundering concern — and effectively cut Cyprus and all of its financial institutions off from the Western banking system. Since Russia provides the primary clientele of Cyprus banks, assertion of the money laundering death penalty there should have pretty serious repercussions among Putin’s buddies.

If a Russian oligarch is inconvenienced buying a new super yacht or mega-mansion for either himself or for Putin, would that be considered a serious economic consequence?

Alexei Navalny would answer with a resounding “Da!”

I say dust off Section 311 of the Patriot Act and let’s find out!

Martin J. Sheil is a retired supervisory agent for IRS Criminal Investigation with 30 years experience, including service as coordinator of the Organized Crime Drug Enforcement Task Force (OCDETF) for the Gulf Coast Region, Branch Chief for the North Texas District (Dallas), Special Agent in Charge for the South Texas District (San Antonio) and as Director of IRS CI Asset Forfeiture in Washington, D.C.

Tags alexei navalny banking regulation Cyprus Department of the Treasury Financial Crimes Enforcement Network Financial regulation Janet Yellen Joe Biden Money laundering Patriot Act Russia Russia sanctions Russian oligarchs Vladimir Putin

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