“Early reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people,” said current FinCEN Director Him Das.
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 Russia may attempt to use to evade sanctions related to military action. of the country in Ukraine.
In a Monday alert, FinCEN reminded U.S.-based financial institutions “with cryptocurrency visibility” and convertible virtual currency, or CVC, to report any activity that could be considered a potential way for Russia to evade sanctions imposed by the US and its allies. While the US watchdog said the Russian government’s use of CVCs to evade large-scale sanctions “was not necessarily practicable,” financial institutions must report such activities by Russian and Belarusian individuals, in actions that many have called “economic warfare”.
“In the face of mounting economic pressure on Russia, it is critically important that US financial institutions remain vigilant for possible Russian sanctions evasion, including those by state actors and oligarchs,” said Him Das, who has been the Acting Director of FinCEN since August. 2021. “Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrencies, 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.”
Lawmakers from the US and the EU 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 would sign an executive order creating a comprehensive regulatory framework for cryptocurrencies, sometime this week, in response to the escalating military situation in Ukraine. On Twitter, Jennifer Epstein, a White House reporter at Bloomberg News, published that, “The long-awaited Biden executive order on cryptocurrencies — outlining the admin’s view of digital assets and directing further study of economic, regulatory and national security issues is finally expected to be signed by the president this week.”
Ukraine’s Minister of Digital Transformation Mykhailo Fedorov has made a direct appeal to crypto exchanges on social media, urging them to block addresses of Russian users. On Twitter, Fedorov posted that, “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.” 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.
By Audy Castaneda
