US Charges Russian Oligarch Andrey Kostin with Money Laundering & Sanctions Evasion Offenses

US Law Enforcement announces indictment of Andrey Kostin, the President and Chairman of a Russian state-owned bank, for involvement in two different schemes violating US sanctions. In one scheme, Kostin and his co-conspirators plotted to dodge sanctions and launder money by leveraging shell companies and intermediaries to maintain his two luxury superyachts, valued at more than $135 million, within the US financial system.

The other scheme involves Kostin and two US individuals, Vadim Wolfson and Gannon Bond, accused of supplying goods, funds, and services to Kostin for a luxury property in Aspen, Colorado. This includes transferring nearly $12 million to Kostin after he was sanctioned, as per justis.gov press release.

Damian Williams, United States Attorney for the Southern District of New York, reportedly remarked,

This investigation highlights the collaborative efforts of this Office and our law enforcement partners around the globe to uphold critical sanctions put in place to support our national security goals and hold accountable those who seek to undermine them.

David J. Scott, special agent In charge at the Washington Field Office of the Federal Bureau of Investigation, stated,

As alleged, Kostin conspired with the defendants and others to violate U.S. sanctions.  Today’s indictment demonstrates that the FBI will work with our partners to hold sanctioned oligarchs and their co-conspirators responsible for their crimes and ensure that they cannot use U.S. financial institutions to harbor illicit funds and goods.

Kostin’s Sanctions: Illict Schemes & Luxury Yachts

On April 6, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) designated Kostin as a Specially Designated National (SDN) pursuant to the International Emergency Economic Powers Act (“IEEPA”). From at least April 6, 2018, to at least March 2, 2022, Kostin and associates, Wolfson and Bond, were engaged in activities to breach IEEPA by furnishing funds, goods, and services,  such as US financial services and transactions for Kostin’s gains.

Before and after OFAC sanctions, Kostin leveraged shell companies to get beneficial ownership and control over assets worth tens of millions of dollars, including two luxury yachts; Sea Rhapsody and Sea & Us valued at approximately  $65 and $70 million respectively.

Kostin bought a luxury home in Aspen, Colorado, for $12 million, in 2010. Between April 6, 2018, and September 2019, Kostin, Wolfson, Bond, and others violated IEEPA, assisting Kostin despite his asset freeze. Despite his designation as SDN, Kostin and his co-conspirators managed to conceal his ownership of Aspen property, violating sanctions, and managed to sell the property delivering Kostin with $12 million.

Wolfson and Bond were apprehended in Austin, Texas, and Edgewater, New Jersey, respectively, and appeared in courts in Texas and New York on 22 Feb 2024.

To secure the financial system, the US Department of Treasury is dedicated to combat activities of money laundering and imposing sanctions on individuals who fail to adhere to legal frameworks. Non-compliance with sanctions can lead to serious penalties, fines, and even criminal charges.

Also read: US Treasury Sanctions Crypto Mixer ‘Sinbad’ for Facilitating Cybercrime Group, Lazarus