FinCEN Issues ‘Red Flags’ on Potential Sanctions Evasion Using Cryptocurrency – The Financial Crimes Enforcement Network (FinCEN) has issued a warning on Russian efforts to circumvent sanctions, which includes several crypto-related red flags. However, the bureau admitted that Bitcoin has not been used to “widespread evasion” of its sanctions.
“It is very important for U.S. financial institutions to be cautious about potential Russian sanctions evasion, including both state actors and oligarchs,” said Him Das, the acting director of FinCEN.
He went on to say:
“Although we have not seen widespread use of Bitcoin to evade our sanctions, early reporting of suspected behavior aids our national security and our efforts to protect Ukraine and its people.”
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Large-scale sanctions evasion utilizing cryptocurrencies by a country like the Russian Federation is “not necessarily possible,” according to the notice. However, the regulator warned that transactions involving crypto wallets or other crypto activity could be linked to sanctioned Russian, Belarusian, and other related individuals.
FinCEN also warns financial institutions about the dangers of Russian-linked malware activities.
A customer initiating a fund transfer through a crypto mixer service or a consumer receiving a transaction “identified by blockchain tracing software as related to ransomware” are two of FinCEN’s red flags for crypto transactions.
A consumer receiving convertible virtual currency (CVC) “from an external wallet, then instantly initiating repeated, quick exchanges among multiple CVCs with no obvious linked reason, followed by a transaction off the platform” is another warning flag.
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FinCEN explains:
This could indicate that attempts have been made to disrupt the chain of custody on the individual blockchains or obfuscate the transaction even more.
FinCEN Issues ‘Red Flags’ on Potential Sanctions Evasion Using Cryptocurrency – The regulator also stated that all financial institutions, as well as cryptocurrency exchanges, should quickly identify and report suspicious activity associated with potential sanctions evasion and conduct risk-based customer due diligence as required.
