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Russian National Targeted By U.S. After Using Crypto to Help Launder Millions

Ekaterina Zhdanova was targeted by the U.S. Treasury’s enforcement arm after being accused of using digital currencies to help Russian elites evade international sanctions. As such, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued its own sanctions on Zhdanova, who was accused of moving and laundering money on behalf of nefarious international actors.

“Through key facilitators like Zhdanova, Russian elites, ransomware groups, and other illicit actors sought to evade U.S. and international sanctions, particularly through the abuse of virtual currency,” Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said in a statement. “We remain focused on safeguarding the U.S. and international financial system against those who seek to exploit this technology, among other illicit finance risks in the virtual assets ecosystem.”

In response to the 2022 invasion of Ukraine by Russian forces, the G7, an informal coalition of the world’s leading economies that includes the U.S., the U.K., Japan, Germany and others, announced a number of targeted actions aimed at limiting Russia’s economic capabilities. Those actions included a “campaign of pressure against Russian elites, proxies and oligarchs close to President Putin and other architects of the war as well as their families and their enablers,” per a White House announcement shortly after the invasion.

“This action is consistent with the G7’s commitment to crack down on sanctions evasion and closing loopholes that allow the Russian state, its elites, proxies, and oligarchs to leverage virtual currency to offset the impact of international sanctions,” reads the OFAC announcement.  

From X (formerly Twitter)

KyivPost @KyivPost ·Nov 2

"The US Treasury’s Office of Foreign Assets Control imposed sanctions on 130 individuals and entities assisting Russia in bypassing economic restrictions and supplying military technology, European Pravda reported."

According to OFAC, in March of 2022, Zhdanova aided Russian clients in hiding the source of their wealth so as to execute a $2.3 million funding transfer into Europe. The action allegedly involved a fraudulent investment account and several real estate purchases. In doing so, Zhdanova was said to have enabled sanctioned individuals to gain access to financial markets they otherwise would not have had access to.

Additionally, Zhdanova was accused of targeting entities with weak anti-money laundering and anti-terrorism financing controls, namely, Russia’s Garantex Europe OU cryptocurrency exchange, to facilitate massive cross-border financial transactions involving digital assets.

From X (formerly Twitter)

CRUX | Crypto News @Coin_Crux ·Nov 1

"WalletConnect, a company that links crypto wallets like MetaMask, has stopped services for customers in Russia. The decision follows new rules from the US Treasury's Office of Foreign Assets Control (OFAC). OFAC has been watching the movement of crypto in Russia since 2021, and in 2022, it issued guidance requiring virtual currency businesses. #crypto #walletconnect"

Garantex has a reputation for “blatantly disregarding” key anti-laundering and anti-terrorism controls, said the U.S. enforcement agency.  

“The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the [specially designated nationals list], but also from its willingness to remove persons [from that list] consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior,” adds OFAC.

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