US sanctions Russian fintech firms accused of enabling sanctions evasion

The U.S. on Monday imposed sanctions on a collection of fintech firms and people, mostly in Russia, accused of enabling sanctions evasion.

Treasury’s Office of Foreign Assets Control sanctioned 13 firms five of which are owned by an already sanctioned person and 2 people who have all either helped build or operate blockchain-based services for, or enabled virtual currency payments in, the Russian financial sector, thus enabling potential sanctions evasion,” according to U.S. Treasury.

Included in Monday’s sanctions are a group of Moscow-based fintech companies and a Russia and UAE-based virtual currency exchange, among others.

Lawmakers and administration officials have voiced concerns that Russia may be using cryptocurrency to avoid pain from the avalanche of sanctions imposed on banks, oligarchs and the energy industry in response to Russia’s February 2022 invasion of Ukraine.

Experts say an increased reliance on cryptocurrency would be an inevitable avenue for Russia to try to prop up its financial transactions, but Treasury officials have rejected the claim that cryptocurrency could be a major driver of sanctions evasion.

Russia is increasingly turning to alternative payment mechanisms to circumvent U.S. sanctions and continue to fund its war against Ukraine, Treasury Under Secretary Brian E. Nelson.

As the Kremlin seeks to leverage entities in the financial technology space, Treasury will continue to expose and disrupt the companies that seek to help sanctioned Russian financial institutions reconnect to the global financial system.

State Department spokesman Matthew Miller said Monday’s action reaffirms the G7 commitment to curtail Russia’s use of the international financial system to further its war against Ukraine. It also reflects our continued efforts to target companies servicing Russia’s core financial infrastructure.

First Published: Mar 26 2024 | 7:29 AM IST