The Cyprus Securities and Exchange Commission (CySEC) issued a notice on Tuesday, asking all regulated entities to be aware of sanction evasion attempts by flagged Russian individuals and entities. It is more concerned with the potential use of cryptocurrencies in sanction evasion.
The latest notice came almost a month after the Cypriot financial market supervisor ordered all regulated entities to implement restrictive measures on Russia-related entities and individuals sanctioned by the European Union.
CySEC primarily cited a paper published by the United States Financial Crimes Enforcement Network (FinCEN) that alerted financial institutions on various sanction evading attempts by Russians.
The paper, which was originally published on 7 March, highlighted the abuse of the financial system with corporate vehicles, shell companies and third parties to shield the identity of sanctioned persons.
Sanctioned Russian individuals and entities are even attempting to use convertible virtual currencies. These transactions are usually initiated from or sent to non-trusted Internet Protocol (IP) addresses mostly from locations in Russia and Belarus. These customers use exchanges or foreign-located Money Service Businesses (MSBs) in a high-risk jurisdiction with a poor anti-money laundering system in place.
Russian hackers are even hoarding funds with Ransomware attacks and other cybercrimes, transferring the ill-gotten proceeds to digital currency mixing services.
Concerned Regulators
Additionally, CySEC pointed out the warning of the United Kingdom financial regulators that clarified the use of crypto assets to evade is as illegal as the use of other regulated financial assets.
“Regulated entities are required to take steps/measures to reduce the risk of sanctions evasion via cryptoasset, including the implementation of additional sanctions, specific controls, as appropriate, and looking for red flag indicators that suggest an increased risk of sanctions evasion,” the regulator stated.
“CySEC urges Regulated Entities to be aware of these red flags… when implementing their due diligence measures, especially for ongoing monitoring of accounts and transactions.”
