The US Financial Crimes Enforcement Network (FinCEN) has warned that cryptocurrencies could be used by Russian oligarchs to circumvent punitive sanctions imposed by the US and its allies during the war in Ukraine. However, market participants believe that bitcoin is not the best way to avoid penalties.
FinCEN has issued a warning to all financial institutions to be on the lookout for signs that sanctioned Russian individuals and entities are attempting to transfer their assets out of Russia. Along with financial institutions, the watchdog of the financial markets refers to deposit-taking institutions, insurers, money services businesses, mortgage brokers, the precious metals and jewelry industry, casinos and operators securities and futures.
“In the face of mounting economic pressure on Russia, it is vitally important for U.S. financial institutions to be vigilant of potential circumvention of Russian sanctions, including by state actors and oligarchs,” said Him Das. , Acting Director of FinCEN. “While we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity helps our national security and our efforts to support Ukraine and its people.
FinCEN provided a list of red flags to help identify suspected sanctions-busting activity and reminded financial institutions of their reporting obligations under the bank secrecy law. The regulator also said that while several Russian and Belarusian banks and financial institutions have been placed on the sanctions list, targeted individuals and entities could still attempt to use unauthorized banks and providers to evade sanctions.
FinCEN also warned that sanctioned individuals and entities may attempt to use cryptocurrencies to evade sanctions. However, as Verdict reported in the past, the oligarchs are unlikely to use bitcoin, ether or even coins to circumvent sanctions.
Contrary to popular belief, virtual currency movements are traceable. This was evidenced by the fact that law enforcement was able to recover ransoms paid to cybercriminals in bitcoin. Experts have noted that regulators like FinCEN will be on the lookout for massive amounts of cryptocurrencies being bought and sold.
The oligarchs could, of course, try to avoid detection by only making small transactions. However, this could prove to be an expensive alternative as moving fiat money into cryptocurrencies is expensive on its own and any additional interest in cryptocurrencies is likely to increase the price of these digital assets.
FinCEN acknowledges that evading sanctions using convertible virtual currencies “is not necessarily feasible”, but still urges cryptocurrency exchanges, administrators and other financial institutions to be mindful of completed transactions related to digital wallets or suspicious activity associated with Russian, Belarusian and other sanctions. affiliated persons.
That being said, GlobalData the researchers wrote in an executive briefing on the conflict in Ukraine on March 4 that the sanctions sending the ruble into freefall will make it more likely that Russian consumers will turn “to cryptocurrencies as well, as has been observed on other markets affected by inflation such as Nigeria. ”
Cryptocurrency exchanges have so far refused to cut off ordinary Russians from their services, but have agreed to ban specific people sanctioned by the United States and its allies.