There has been talk for a long time that digital currencies could be used by the Russians, as well as North Korea Where Iranto circumvent the severe sanctions imposed by the international community.
Circumventing sanctions: Ukraine’s strategy
A few weeks after the outbreak of war, the Ukrainian government had expressly requested numerous Exchanges to ban Russian users from using cryptocurrencies precisely to avoid the possibility of circumventing sanctions.
The alarm is now sounding in this regard from a British body specifically dedicated to the repression of crimes against property and in particular to the fight against money laundering and tax evasion. The Joint Money Laundering Intelligence Task Force (JMLIT) identified the use of cryptocurrency assets by Designated Persons (DPs) to move large sums of money and evade the growing sanctions currently in place against Russia following the invasion of Ukraine.
This alarm comes after some data shows that cryptocurrencies have grown significantly in recent months in Russia, where at least $214 billion of cryptocurrency would be stored and the country would now become the third largest mining destination in the world.
The wide availability of energy commodities has made the country one of the world’s top destinations for Bitcoin miners, after the ban imposed on them by Chinese authorities. In July, the Russian Central Bank announced the possibility of legalizing cryptocurrency mining in the country.
High risks of money laundering via cryptocurrencies
The JMLIT points out that weak controls and non-compliance with the rules of the digital asset market would provide a unique opportunity for Russians to partially circumvent the weight of the imposed sanctions. British authorities are also rumored to have arrested around a dozen people in recent days who were involved in shady financial dealings with cryptocurrencies.
Martin playsanti-money laundering expert and managing director of Smart searcha British company specializing in anti-money laundering software, has warned of the risk posed by insufficient control of cryptocurrencies by companies themselves and government authorities.
“As DPs continue to take advantage of the growing crypto network to transfer assets, companies in the sector are highly exposed to potential money laundering.
“It is therefore imperative that regulated companies strengthen their due diligence and implement effective AML procedures, and arguably the most accurate way to do this is through electronic verification and a cloud-based AML system.”
The risk then is that so-called cryptocurrency mixers such as Tornado Cash, which has found itself in the eye of the storm in recent weeks precisely because of the serious money laundering allegations concerning $4 billion by the Dutch authorities, which also led to the arrest of one of the company’s developers.
According to the charges, companies such as Tornado Cash were created precisely to circumvent laws against money laundering and tax evasion. But the CEO of Terra itself, which collapsed miserably two months ago, shaking the entire cryptocurrency market, is also facing money laundering charges brought by Korean authorities.