FinCEN Provides Financial Institutions with Red Flags on Potential Russian Sanctions Evasion Attempts
March 7, 2022 / Source: FinCEN
WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) today issued a FinCEN Alert, advising 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 alert provides examples of red flags to assist in identifying suspected sanctions evasion activity and reminds financial institutions of their reporting obligations under the Bank Secrecy Act.
“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.”
In recent days [and weeks], the United States and its key partners and global allies have imposed unprecedented economic pressure on Russia and Belarus. As a result, sanctions evasion may occur through various means, including through currently unsanctioned Russian and Belarusian banks or other financial institutions that retain at least some access to the international financial system.
While large scale sanctions evasion using convertible virtual currency (CVC) by a government such as the Russian Federation is not necessarily practicable, CVC exchangers and administrators and 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. In addition, FinCEN reminds financial institutions of the dangers posed by Russian-related ransomware campaigns.
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. Financial institutions are also encouraged to make full use of the information sharing authorities provided by Section 314(b) of the USA PATRIOT Act.
Relevant information to assist with law enforcement investigations will be shared with the U.S. Department of Justice, international partners, and task forces that are established to track and freeze the assets of Russian elites.