Blue-chip institutions including Goldman Sachs and J.P. Morgan are trialing digital asset offerings, seeking cost savings and efficiencies.
US Treasury Cracks Down: Sanctions Crypto Money Launderer Tied To Russian Elite
In a significant move to combat sanctions evasion and illicit financial activities, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on Ekaterina Zhdanova, a Russian national allegedly involved in laundering and transferring funds using crypto on behalf of Russian elites.
According to the announcement, the action aligns with the G7’s commitment to closing loopholes that allow Russian state actors, oligarchs, and proxies to exploit virtual currency to circumvent international sanctions.
Crypto Money Laundering Exposed
Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson emphasized the alleged role played by key facilitators like Zhdanova in aiding Russian elites, ransomware groups, and other illicit actors in evading US and international sanctions through the abuse of cryptocurrencies.
Nelson stated that the Treasury remains steadfast in its efforts to safeguard the global financial system against such exploitation and other risks within the crypto ecosystem.
Allegedly, Zhdanova’s involvement in obfuscating the source of wealth for a Russian client, enabling the transfer of over $2.3 million into Western Europe via fraudulent investment accounts and real estate purchases, drew OFAC’s attention.
Zhdanova’s services provided sanctioned Russian individuals access to Western financial markets that would otherwise be restricted due to US and international prohibitions.
The US Treasury Department alleges that such illicit financial activities enable the evasion of multilateral sanctions and undermine efforts to hold Russia accountable for its unprovoked war and aggression.
Utilizing cryptocurrencies as a facilitator of large cross-border transactions, Zhdanova relied on entities lacking Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) controls, including the OFAC-designated Russian cryptocurrency exchange, Garantex Europe OU.
Zhdanova employed various methods to transfer funds internationally, including cash transactions and leveraging connections with other money laundering associates and organizations.
Additionally, she utilized traditional businesses, such as a luxury watch company with global offices, to maintain access to the international financial system.
Furthermore, it is alleged that Zhdanova conducted crypto exchange transfers on behalf of oligarchs who relocated internationally, facilitating the movement of over $100 million to the United Arab Emirates.
Unveiling The Scheme
Zhdanova also provided a tax residency service in the UAE to Russian clients, potentially participating in identity obfuscation. This service offered clients a UAE tax residency, identification card, and bank account, with payments made in cash or virtual currency, subsequently transferred to foreign bank accounts at the client’s discretion.
Notably, Zhdanova’s services extended to individuals associated with the notorious Russian Ryuk ransomware group. Zhdanova allegedly laundered approximately $2.3 million in suspected victim payments for a Ryuk ransomware affiliate, which has targeted numerous victims worldwide, including the United States, particularly in the healthcare sector.
As a consequence of this action, all US persons must report any property or interests in property belonging to Zhdanova or any entities directly or indirectly owned by her. Transactions involving such property are generally prohibited unless authorized by OFAC.
Featured image from Shutterstock, chart from TradingView.com
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Fiat – Not Crypto – Still The Top Choice For Financial Crimes, US Treasury Says
Fiat, a government-issued currency, is still the best choice of financial criminals.
Concerns have always centered on the possibility of crypto assets being used for nefarious reasons, however the US Treasury department just released something that dispels these anxieties.
Despite widespread fears that cryptocurrency could be used for criminal purposes, a newly published report by the US Treasury indicates that the bulk of financial crimes are still committed using fiat money.
The US Treasury presented a three-year report on money laundering, proliferation financing, and terrorist financing early this month. And they were all based on digital assets.
And crypto detractors may believe this is all about digital assets being widely employed in these sectors.
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It’s Fiat, Not Crypto
Nevertheless, fiat currencies and traditional money are still more often utilized in this circumstance, thus they are more likely to come into play.
The Treasury’s findings include a detailed discussion of virtual currencies, stating that both their user base and market capitalization have expanded dramatically since the previous risk assessment in 2020.
However, these reports found that criminal flows via fiat currency and established networks continue to outnumber those involving cryptocurrency.
Crypto total market cap at $1.805 trillion on the daily chart | Source: TradingView.com
The US Treasury disclosed the following:
“The use of crypto assets for money laundering continues to be significantly less prevalent than the use of fiat cash and other more traditional means.”
Crypto Still A Good Choice For Crime
According to the National Money Laundering Risk Assessment, “virtual assets” are an ever-evolving domain within money launderers’ expanding armory for concealing their finances.
It singled out DeFi and “anonymity augmenting technology” as possible perpetrators.
Throughout the pandemic, virtual assets have apparently been used extensively in phishing assaults and ransomware scams.
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Shady operators may use pledges of profit from the unpredictable cryptocurrency market to entice victims into disclosing personal information or infecting their devices with viruses.
The attackers may then demand payment in crypto following the attack, which is both pseudonymous and irreversible.
In a recent Chainalysis Crypto Crime Report, many criminals use over-the-counter brokers to launder their cryptocurrencies.
OTC brokers are individuals or businesses that assist transactions between buyers and sellers who do not wish to (or are unable to) conduct business on a cryptocurrency exchange.
A Staggering Amount
Meanwhile, a United Nations report says that money laundering costs the global economy between $800 billion and $2 trillion per year.
This equates to between 2% and 5% of gross domestic output. Today, almost 90% of money laundering remains undetected.
However, technological advancements have led in the development of more effective tools. Criminals continue to use these advancements to move dirty money.
Simultaneously, government agencies and fintech firms utilize technology to identify transaction characteristics and assist in exposing fraud.
Featured image from India Today, chart from TradingView.com
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