The US Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on 13 entities and two individuals for their alleged role in assisting Russian nationals in skirting sanctions through the use of cryptocurrencies. These parties are accused of enabling transactions and providing services that aid other sanctioned parties in defying restrictions, especially amidst the ongoing Russia-Ukraine conflict.
Intervention in Russian Financial Operations
Treasury Under Secretary for Terrorism and Financial Intelligence, Brian E. Nelson, has pointed out Russia’s growing reliance on alternative payment systems to sidestep US sanctions, maintaining financial support for the war in Ukraine. The Treasury is actively identifying and obstructing entities aiding sanctioned Russian financial institutions in accessing the global financial network.
Blockchain analytics firm Chainalysis recently outlined how certain blacklisted crypto companies have contributed to sanction evasion. Specifically, the firms Netex24 and Bitpapa are implicated in managing transactions with sanctioned banks, crypto exchanges, and darknet markets.
Chainalysis reports detail Netex24’s support for Russian banks like Tinkoff and Sberbank, and Bitpapa’s operation of a peer-to-peer crypto exchange used by Russian citizens. These entities have channeled substantial funds to sanctioned bodies and darknet markets over the past years, with a marked surge in transactions to illicit services following the onset of the conflict in Ukraine.
Enhanced Monitoring from OFAC
OFAC is heightening its oversight to counter sanction evasion via cryptocurrencies, focusing on companies that facilitate financial flows for sanctioned Russian banks. Chainalysis underscores the necessity of monitoring these operations to obstruct illegal financial acts and uphold global sanctions.
The sanctions by OFAC underscore the increased attention on cryptocurrency services in the realm of sanction enforcement. As regulatory bodies persist in supervising the cryptocurrency sector, businesses within this domain are expected to observe compliance protocols to deter the misuse of their platforms for illicit activities.