The United States Financial Crimes Enforcement Network, or FinCEN, an office of the Treasury Department, has warned financial institutions to consider cryptocurrencies as a possible means that Russia may attempt to use to circumvent sanctions related to military action. of the country in Ukraine.
In an alert issued Monday, FinCEN reminded US-based financial institutions “with visibility into cryptocurrency” and convertible virtual currency, or CVC, to report any activity that could be considered a potential way for Russia to evade US-imposed sanctions. and their allies. Although the US watchdog said the Russian government’s use of CVCs to evade large-scale sanctions “was not necessarily practicable,” financial institutions were required to report such activities by named Russian and Belarusian individuals in actions that many have dubbed “economic warfare”.
“In the face of mounting economic pressure on Russia, it is critically important that US financial institutions remain vigilant for possible evasion of sanctions on Russia, both by state actors and oligarchs,” said Him Das, who has been FinCEN’s acting director since August 2021. “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.
Many US lawmakers and agencies have spoken out about Russia-based individuals and banks potentially trying to use cryptocurrencies to evade sanctions announced by President Joe Biden on February 24. The Treasury Department’s Office of Foreign Assets Control – the agency responsible for administering and enforcing US sanctions – warned US residents on February 28 not to use digital currencies to benefit the Russian government or central bank. OFAC guidelines equated crypto asset transactions to “deceptive or structured transactions or dealings.”
US and EU lawmakers have also drawn attention to Russia’s potential to use crypto assets, as the country’s options shrink amid the exclusion of the SWIFT payments network and the inclusion of its major banks. on the lists of internationally sanctioned entities. Bloomberg reported on Monday that President Biden will sign an executive order creating a comprehensive regulatory framework for cryptocurrencies sometime this week in response to the escalating military situation in Ukraine.
There have been lots of fits and starts on the crypto EO but this week’s timeline is real. CNBC’s @kaylatausche is also confirming our reporting. https://t.co/6uFj8HFSjH
— Jennifer Epstein (@jeneps) March 7, 2022
Mykhailo Fedorov, Minister of Digital Transformation of Ukraine, has made a direct appeal to cryptocurrency exchanges on social networks, urging them to block the addresses of Russian users. However, many exchanges, including Binance and Kraken, have said they will not act unilaterally to block all users in Russia from accessing their coins, unless there is a legal requirement to do so.
I’m asking all major crypto exchanges to block addresses of Russian users.
It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.
— Mykhailo Fedorov (@FedorovMykhailo) February 27, 2022
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