The Financial Crime Enforcement Network (FinCEN) mentioned cryptocurrency in its latest alert on Russian sanctions.
FinCEN advised all financial institutions to be “vigilant against potential efforts to evade the expansive sanctions and other U.S.-imposed restrictions implemented in connection with the Russian Federation’s further invasion of Ukraine.”
The agency reminds financial institutions that they have an obligation under the Bank Secrecy Act to report all red flags and assist in identifying suspected acts of sanction evasion, including suspicious use of cryptocurrency.
“In the face of mounting economic pressure on Russia, it is vitally important for U.S. financial institutions to be vigilant about potential Russian sanctions evasion, including by both state actors and oligarchs,” said Acting Director Him Das.
“Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people.”
FinCEN admits that “convertible virtual currency (CVC)” isn’t the most efficient way for the Russian Federation to evade sanctions, but CVC exchanges and administrators, as well as other financial institutions “may observe attempted or completed transactions tied to CVC wallets or other CVC activity associated with sanctioned Russian, Belarusian, and other affiliated persons.”
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“All financial institutions—including those with visibility into cryptocurrency or CVC flows, such as CVC exchangers and administrators—should identify and report suspicious activity associated with potential sanctions evasion quickly and conduct appropriate, risk-based customer due diligence or enhanced due diligence where required,” FinCEN said.
“Financial institutions are also encouraged to make full use of the information sharing authorities provided by Section 314(b) of the USA PATRIOT Act.”
The warning from FinCEN comes as President Biden gets ready to sign a new executive order directing various government agencies to study the ramifications of cryptocurrency and a US-backed central bank digital currency (CBDC).
Heightened scrutiny on crypto assets has forced the biggest exchanges in the industry to do their part in assisting the US government in its new cold war with Russia. Coinbase said it had blocked over 25,000 addresses from Russia and given secondary information on the accounts to authorities, and Binance has also pledged to block any sanctioned wallets or addresses from Russia. Non-fungible token (NFT) marketplace Opensea has reportedly begun blocking users from Iran and other sanctioned countries, though it's not clear whether that has turned into a blanket ban or not.
