In a major step to combat sanctions evasion and illicit financial activity, the U.S Foreign Assets Control Division of the Ministry of Finance (OFAC) has imposed sanctions on Ekaterina Zhdanova, a Russian citizen allegedly involved in money laundering and money transfers using crypto on behalf of Russian elites.
According to the announcementThe move is in line with the G7’s commitment to closing loopholes that allow Russian state actors, oligarchs and proxies to exploit virtual currencies to circumvent international sanctions.
Cryptocurrency money laundering exposed
Brian E. Nelson, the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, highlighted the alleged role key figures like Zhdanova play in aiding Russia’s elites. ransomware groupsand other illegal actors evading US and international sanctions by misusing cryptocurrencies.
Nelson stated that the Treasury Department remains steadfast in its efforts to protect the global financial system from this exploitation and other risks within the crypto ecosystem.
Reportedly, Zhdanova’s involvement in obscuring the source of wealth for a Russian client, facilitating the transfer of more than $2.3 million to Western Europe through fraudulent investment accounts and real estate purchases, caught the attention of OFAC.
Zhdanova’s services granted Russian individuals access to Western financial markets, which would otherwise be restricted due to U.S. and international bans.
The US Treasury Department claims this is the case illegal financial activities enable the avoidance of multilateral sanctions and undermine efforts to hold Russia accountable for its unprovoked war and aggression.
Zhdanova used cryptocurrencies as a facilitator of large cross-border transactions and relied on entities that did not Combating money laundering/fighting the financing of terrorism (AML/CFT) controls, including the OFAC-designated Russian cryptocurrency exchange, Garantex Europe OU.
Zhdanova used various methods to transfer money internationally, including cash transactions and exploiting connections to other money laundering companies and organizations.
In addition, she used traditional companies, such as a luxury watch company with global offices, to maintain access to the international financial system.
Furthermore, it is alleged that Zhdanova was running cryptocurrency operations bill transfers on behalf of oligarchs who have moved internationally, facilitating the movement of more than $100 million to the United Arab Emirates.
Revealing the schedule
Zhdanova also provided a tax residency service in the UAE Russian customers, who may be participating in identity misappropriation. This service provided customers with UAE tax residency, an ID card and a bank account, with payments made in cash or virtual currency and then transferred to foreign bank accounts at the customer’s discretion.
Notably, Zhdanova’s services extended to individuals associated with the infamous Russian Ryuk ransomware group. Zhdanova is alleged to have laundered approximately $2.3 million in suspected victim payments for a Ryuk ransomware affiliate, which has targeted numerous victims worldwide, including the United States, particularly in the healthcare sector.
As a result of this action, all U.S. persons must report ownership or interest in property of Zhdanova or entities directly or indirectly owned by it. Transactions involving such properties are generally prohibited unless approved by OFAC.
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