FINCEN Mentions Crypto Among Potential Tools for Russia for Evading Sanctions

In one of its latest reflags, the U.S. Financial Crimes Enforcement Network (FINCEN) has issued a warning for financial institutions to consider cryptocurrencies as potential tools of evading sanctions by Russia.

Russia is facing some strict set of financial sanctions by the West, especially coming from the U.S. There has been a broader opinion that Russians can use crypto to evade sanctions by bypassing the traditional financial system.

In its recent alert on Monday, March 7, FINCEN asked financial institutions to report any activity that could serve a way for Russia to bypass sanctions levied by the U.S. and its NATO allies. Him Das, who has been the FinCEN acting director since August 2021 said:

“In the face of mounting economic pressure on Russia, it is vitally important for U.S. financial institutions to be vigilant about potential Russian sanctions evasion, including by both state actors and oligarchs. Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people.”

Although the FINCEN has sanctioned Russian and Belarusian entities and individuals, there could be some potential gaps in this space. It has thus asked U.S.-based crypto exchanges to maintain vigilance to track transactions tied to crypto wallets  or other activities associated with sanctioned Russian and Belarusian individuals or entities.

FINCEN notes that the crypto exchanges should be able to monitor transactions coming from some suspicious IPs.

The U.S. lawmakers have been keenly putting up their concern in regards to the use of crypto. It had also asked exchanges to impose blanket ban on Russian users. However, exchanges like Kraken, Coinbase and Binance have refrained from taking such drastic measures. But they have assured compliance with law enforcement agencies to track sanctioned individuals and entities.

Following the U.S. sanctions, there was some speculation that Russians shall be moving a large sums of money into crypto. The crypto market rally earlier last week was also linked to it. However, this hasn’t turned out to necessarily the case despite the Ruble collapsing 30% against the USD. The Ruble-denominated activity remains subdued at the crypto exchanges.