April 08, 2022

Warren, Whitehouse, Cassidy, Wicker Introduce Bipartisan Bill to Clamp Down on Hidden Oligarch Assets

KLEPTO Act would help identify the true owners of mansions, yachts, and private jets held in the U.S. market, helping U.S. law enforcement track down the wealth of sanctioned kleptocrats

Bill Text (PDF)

Washington, D.C. – Today, United States Senators Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.), Bill Cassidy (R-La.), and Roger Wicker (R-Miss.) introduced the bipartisan Kleptocrat Liability for Excessive Property Transactions and Ownership (KLEPTO) Act. The KLEPTO Act would expose the assets of oligarchs, kleptocrats, and international criminals hidden in the United States, strengthen U.S. anti-money laundering safeguards, and arm law enforcement with the information required to track down kleptocrats’ luxury assets in the U.S. financial system. 

“Right now in this country, sanctioned Russian oligarchs, criminals, and terrorists are able to stash their money in the shadows by buying and selling mansions, yachts, and private jets,” said Senator Warren. “It's time we close these loopholes and give U.S. officials the tools they need to track down the hidden wealth of these corrupt actors and fully enforce sanctions.”

“Putin and his corrupt oligarchs pillage their own people, then use all manner of financial schemes to stash that stolen money in high-end real estate, mega-yachts, and private jets,” said Senator Whitehouse. “Step one in neutralizing those oligarchs and their schemes is pinpointing their crooked assets. This bipartisan legislation will shine the light of transparency on these shady transactions and help to crack down on kleptocracy and international corruption.”

“Putin and his cronies move millions of dollars to buy yachts and fund Putin’s war machine while the Russian people suffer. It’s time the U.S. takes action and stops oligarchs from abusing our financial system for their own benefit,” said Senator Cassidy.

“I am pleased to cosponsor the bipartisan KLEPTO Act with my colleagues,” said Senator Wicker. “Russian oligarchs and their western enablers are fueling the horrific destruction and killing in Ukraine. We need to do everything in our power to seize the luxury assets they have purchased with blood money. Ukraine must win this war and Putin's aggression and war crimes must be severely punished.”

It is estimated that Vladimir Putin, his oligarchs, and other Russian elites have nearly $1 trillion hidden in assets across the globe. The FinCEN Files and Panama, Paradise, and Pandora Papers revealed the ease with which kleptocrats and criminals exploit rule-of-law financial systems to hide ill-gotten gains behind anonymous trusts, shell corporations, and other illicit schemes. 

The KLEPTO Act, S.4075: 

  • Requires the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to mandate disclosure of beneficial ownership information (the identity of the real person behind an entity) for all real estate transactions through legal entities;
  • Requires the Federal Aviation Administration to collect beneficial ownership information for all aircraft registered in the U.S.;
  • Requires FinCEN to extend anti-money laundering safeguards to the real estate sector;
  • Requires FinCEN to extend anti-money laundering safeguards to businesses that sell boats, planes, and automobiles;
  • Clarifies that any foreign entity that buys or holds real estate in the U.S. should be considered a “reporting company” under the Corporate Transparency Act; 
  • Requires the Treasury Department to report on how digital ledger technology could be used to create a tamper-proof, permanent record of real estate transfers; and
  • Mandates a subsequent Treasury pilot testing such a program. 

"The KLEPTO Act recognizes that in order to freeze and seize Russian mansions, private jets, and yachts in America, you have to be able to find them," said Ian Gary, Executive Director of the FACT Coalition. "The FACT Coalition applauds this bipartisan effort to make sanctions against Russian oligarchs more effective and to shine a light on the ways that other kleptocrats and criminals are currently abusing U.S. markets for their own destructive purposes. We urge its quick passage."

“In every corner of the world, corrupt officials prefer to launder their dirty money by purchasing real estate, and the size and stability of the U.S. market makes it uniquely attractive,” said Scott Greytak, Director of Advocacy for Transparency International U.S. “Every home, every office building, every piece of property that’s purchased to stash foreign corrupt money, instead of to house people, drives up the cost of living and injects risk into the local economy. The KLEPTO Act's due diligence requirements for those involved in real estate transactions offers a path forward for the U.S. real estate market to finally close its doors to dirty money from oligarchs, kleptocrats, and other criminals.”

The bill is endorsed by the Financial Accountability and Corporate Transparency (FACT) Coalition, Global Financial Integrity, Transparency International U.S., and the ONE Campaign. 

Senator Warren is a leader in ensuring the integrity and transparency of the financial system. As the United States has led global efforts to sanction Russia and Russian individuals in response to Putin’s unjustifiable invasion and war in Ukraine, Senator Warren has worked to ensure that these sanctions are fully enforced. 

  • At a hearing of the Senate Banking Committee, Senator Warren called on the Treasury Department and Securities and Exchange Commission (SEC) to close the loophole that exempts the $11 trillion private investment industry from anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations, which would help the U.S. track down the hidden wealth of sanctioned Russians and combat money laundering, terrorist, and criminal activity
  • In March, Senator Warren and Whitehouse wrote a letter again calling on the Treasury Department and SEC to close the AML/CFT loophole for the private investment industry.  
  • At a hearing of the Senate Banking Committee, Senator Warren warned that Putin and Russian elites could use crypto to hide their wealth and evade economic sanctions. 
  • Senator Warren and Senators Jack Reed (D-R.I.), Mark Warner (D-Va.), and Jon Tester (D-Mont.) introduced the Digital Asset Sanctions Compliance Enhancement Act of 2022, which would ensure that Vladimir Putin and Russian elites don’t use cryptocurrencies and other digital assets to undermine the international community’s economic sanctions against Russia.
  • Senator Warren and Senators Warner, Sherrod Brown (D-Ohio), and Reed sent a letter to Treasury Secretary Janet Yellen raising concerns regarding the potential use of cryptocurrency to evade sanctions, which have become even more urgent amid the sanctions imposed on Russia after its invasion of Ukraine.