OFAC Sanctions Russian National Over Money Laundering Through Cryptocurrency

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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June 13, 2024

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The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additional measures on June 12 to increase pressure on Russia in response to its ongoing conflict with Ukraine.

OFAC Sanctions Limit Russian Access to Specific US software and IT services

OFAC announced plans to increase secondary sanctions on foreign financial institutions that are involved with Russia’s war economy, and to restrict Russian access to certain U.S. software and IT services. These targets include Chinese companies selling semiconductors to Moscow.

The Treasury is now threatening to cut off these companies’ access to the US financial system.

RUBLE IS COLLAPSING

⚡️⚡️⚡️ In St. Petersburg, Russia lines are forming at money changers after the news broke about the new US sanctions that caused the suspension of currency trading on the Moscow Exchange.

👉 The Ruble is going bust!! pic.twitter.com/Im8oLbx7n7

— Jason Jay Smart (@officejjsmart) June 12, 2024

These OFAC sanctions also target a Russian national, Andrey Dmitriyevich Sudakov, affiliated with Russian state-owned gold producer Polyus, for alleged involvement in a sophisticated cryptocurrency laundering scheme.

According to the Treasury’s report, Sudakov allegedly used front companies in the UAE and Hong Kong to convert payments from Russian gold sales into cryptocurrencies.

OFAC’s sanctions and the uncovered crypto laundering schemes align with findings from blockchain intelligence firm TRM.

TRM reported that Chinese manufacturers, middlemen, and Russian cryptocurrency traders have been facilitating payments for goods and services that support Russia’s war effort.

The use of cryptocurrencies for these transactions demonstrates the global and complex nature of these illicit activities.

This is not the first time OFAC has imposed sanctions to weaken Russia’s military capabilities. On May 1, the US sanctioned crypto wallet addresses linked to drone maker OKO Design Bureau.

This action followed the discovery that the drone company used these addresses to solicit crypto donations on Telegram.

Overview of OFAC Sanctions on Russia

The latest OFAC sanctions include restricting Russian access to certain U.S. software and IT services.

Foreign financial institutions face an increased risk of sanctions for large transactions or services involving individuals blocked under Executive Order (E.O.) 14024, including major Russian banks.

The Treasury has updated the Specially Designated Nationals (SDN) and Blocked Persons List to include the foreign locations of five sanctioned Russian financial institutions, providing the addresses and aliases of their foreign branches.

In March 2024, OFAC targeted Russian blockchain companies for sanctions evasion on behalf of Russian nationals.

The US Treasury disclosed that some entities operate in Russia to facilitate cryptocurrency transactions with sanctioned banks, exchanges, and darknet markets.

Designations have also been made against Russia’s largest public trading markets and financial service providers, such as the Moscow Exchange (MOEX), National Clearing Center (NCC), and Non-Bank Credit Institution Joint Stock Company National Settlement Depository (NSD).

The #US Treasury Department has authorized transactions with Moscow Exchange until August 13

The US Treasury Department's Office of Foreign Assets Control has issued a general license to curtail operations with Moscow Exchange, the National Clearing Center (NCC) and the National… pic.twitter.com/M9F6nUgxdP

— NEXTA (@nexta_tv) June 13, 2024

Additionally, more than 100 entities within Russia’s defense, manufacturing, technology, transportation, and financial services sectors have been targeted, underscoring Russia’s transition towards a war economy.