FinCEN Issues ‘Red Flags’ on Potential Sanctions Evasion Using Cryptocurrency – Regulation Bitcoin News

Financial Crimes Enforcement Network, FinCEN has released an advisory regarding Russian attempts to evade sanction. This includes some crypto-related red alerts. However, the bureau admitted that it has not seen “widespread evasion” of its sanctions using cryptocurrency.

FinCEN Warning About Sanctions Evasion

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, issued an advisory Monday providing regulated financial institutions with “red flags on potential Russian sanctions evasion attempts.”

Him Das, acting director of FinCEN, said: “It is vitally important for U.S. financial institutions to be vigilant about potential Russian sanctions evasion, including by both state actors and oligarchs.” He further noted:

However, we haven’t seen widespread violations of sanctions by cryptocurrency. We encourage you to report suspicious activities to help us protect the country and support Ukraine.

The notice explains that large-scale sanctions evasion using cryptocurrency by a government such as the Russian Federation is “not necessarily practicable.” However, the regulator noted that there may be transactions tied to crypto wallets or other crypto activities associated with sanctioned Russian, Belarusian, and other affiliated persons.

FinCEN reminded financial institutions that ransomware-related attacks can pose a threat to their reputations.

The red flags applicable to crypto transactions outlined by FinCEN include a customer initiating a transfer of funds involving a crypto mixer service or a customer receiving a transaction “identified by blockchain tracing software as related to ransomware.”

Another red flag is when a customer receives convertible virtual currency (CVC) “from an external wallet, and immediately initiates multiple, rapid trades among multiple CVCs with no apparent related purpose, followed by a transaction off the platform.” FinCEN described:

This could indicate that there are attempts to break or obscure the transactions’ chain of custody.

In conclusion, the regulator stressed that all financial institutions, including cryptocurrency exchanges, “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.”

What do you think about FinCEN’s advisory? Please leave your comments below.

Kevin Helms

Kevin, a student of Austrian Economics and evangelist since 2011, discovered Bitcoin. His main interests are in Bitcoin security, open source systems, network effects, cryptography, and intersections between economics, cryptography, and Cryptography.