G7 Countries Aim to Prevent Russia from Using Crypto to Evade Sanctions

A joint statement was issued by the Group of Seven (G7) countries in which they said that they would ensure that crypto assets cannot be leveraged by Russian proxies, elites, oligarchs and state for evading the international sanctions that have been imposed against it. Furthermore, the US Treasury Department is also keeping a close eye on any efforts that may be made for evading the sanctions imposed on Russia, including the use of virtual assets to do so. The statement from the G7 countries was issued on Friday and also discussed further sanctions that were to be imposed on Russia.

As per the statement, since Vladimir Putin, the President of Russia, had launched a military operation in Ukraine back on February 24^th, the countries have imposed restrictive and expansive measures that have compromised the financial system and Russian economy severely. The G7 countries have also taken measures that would help in ensuring the restrictive measures remain effective, which includes cracking down and ensuring there are no loopholes that can be used. The joint statement of the countries said that along with the other measures that could be used for evading the imposed sanctions, they would make sure that digital assets could not be used for offsetting and evading them.

According to the G7 leaders, this would limit Russia’s access to the global financial system even further. They added that the existing sanctions that had been imposed also include crypto assets. The statement said that they were committed to using better measures for detecting any potential illicit activity. It further clarified that action would be taken against all Russian actors who would attempt to use crypto assets for transferring and enhancing their wealth, as is what their national processes require. The OFAC, which is the Office of Foreign Assets Control of the Department of Treasury in the US, also issued guidance about the possibility of digital assets for evading the US sanctions against Russia, on Friday.

The guidance dictates that all US persons have to comply with OFAC regulations when it comes to all transactions, whether they are conducted in traditional fiat currency or digital currency. The guidance stated that regardless of their location, all US persons, which include companies processing digital asset transactions, have to be vigilant. It said that they need to keep an eye out for attempts to evade the OFAC regulations and should also implement risk-based measures for preventing the possibility of prohibited transactions.

It was further mentioned in the guidance that the OFAC was keeping a close eye on any efforts for violating or circumventing the Russian sanctions, which includes the use of crypto. It said that the department was prepared to use their broad enforcement authority for promoting compliance and acting against violations. Janet Yellen, the Treasury Secretary, said last week that they were also monitoring the use of cryptocurrencies for evading the sanctions and red flags had been issued by the Financial Crimes Enforcement Network (FinCEN) on potential evasion of sanctions via crypto.