It includes several crypto-related red flags. The bureau acknowledged that it hasn’t seen widespread evasion of its sanctions by using cryptocurrency.
FinCEN warns about sanctions evasion
Financial Crimes Enforcement Network (FinCEN), which is a U.S. Department of the Treasury bureau, issued Monday an advisory providing financial institutions with “red flags” regarding possible Russian sanctions evasion attempts.
Him Das, FinCEN’s acting director, stated that it was vital for U.S. financial institutions not to lose sight of potential Russian sanctions evasion by both state actors as well as oligarchs.
Although there has not been widespread evasion using cryptocurrency to circumvent our sanctions, timely reporting suspicious activity helps to protect our national security and aid Ukraine’s people.
The notice clarifies that large-scale sanctions evasion using crypto by a government like the Russian Federation is not necessarily possible. However, it noted that transactions may be tied to crypto wallets and other crypto activities that are associated with sanctioned Russian or Belarusian individuals.
FinCEN also reminds financial institutions about the dangers posed Russian-related ransomware attacks.
FinCEN outlines the red flags for crypto transactions. These include customers initiating funds transfers involving crypto mixer services or customers receiving ransomware-related transactions.
A customer receiving convertible virtual currency (CVC), “from an exterior wallet”, and initiating multiple, rapid trades among multiple CVCs without apparent related purposes, is another red flag. FinCEN describes:
This could be an indication that someone is trying to break the chain custody on each blockchain or further obscure the transaction.
The regulator stated that all financial institutions, cryptocurrency and not just cryptocurrency exchanges, should quickly identify suspicious activity and report it to the authorities. They also need to conduct appropriate customer due diligence and enhanced due diligence if necessary.