OFAC Imposes Sanctions on Russian Individual for Using Cryptocurrency to Facilitate Money Laundering

OFAC Imposes Sanctions on Russian National for Cryptocurrency Money Laundering
The US Treasury Department has implemented sanctions on a Russian individual for using cryptocurrencies to launder money related to Russian gold sales.
In response to the ongoing conflict between Russia and Ukraine, the Office of Foreign Assets Control (OFAC) announced additional measures on June 12 to increase pressure on Russia.
These sanctions aim to limit Russian access to specific US software and IT services, and secondary sanctions will be imposed on foreign financial institutions involved with Russia’s war economy. Moreover, Russian access to certain US software and IT services will be restricted, including Chinese companies supplying semiconductors to Moscow.
The Treasury has threatened to cut off these companies’ access to the US financial system as part of these measures.
The sanctioned individual, Andrey Dmitriyevich Sudakov, linked to Russian state-owned gold producer Polyus, is accused of participating in a complex cryptocurrency laundering scheme. The Treasury alleges that Sudakov used front companies in the UAE and Hong Kong to convert payments from Russian gold sales into cryptocurrencies.
The uncovered crypto laundering schemes align with reports from blockchain intelligence firm TRM, which revealed that Chinese manufacturers, middlemen, and Russian cryptocurrency traders have been aiding Russia’s war effort by facilitating payments for goods and services.
This use of cryptocurrencies for illicit transactions highlights the global and intricate nature of these activities.
OFAC has previously imposed sanctions to weaken Russia’s military capabilities. In May, the US sanctioned crypto wallet addresses associated with drone maker OKO Design Bureau, after discovering that the company used these addresses to seek crypto donations on Telegram.
The latest OFAC sanctions not only restrict Russian access to specific US software and IT services but also increase the risk of sanctions for foreign financial institutions engaging in large transactions or services involving individuals blocked under Executive Order (E.O.) 14024, including major Russian banks.
The Specially Designated Nationals (SDN) and Blocked Persons List has been updated to include the foreign locations of five sanctioned Russian financial institutions, providing details of their foreign branches.
In March 2024, OFAC targeted Russian blockchain companies for sanctions evasion on behalf of Russian nationals. Entities operating in Russia to facilitate cryptocurrency transactions with sanctioned banks, exchanges, and darknet markets have also been disclosed.
Moreover, designations have been made against Russia’s largest public trading markets and financial service providers, such as the Moscow Exchange (MOEX), National Clearing Center (NCC), and Non-Bank Credit Institution Joint Stock Company National Settlement Depository (NSD).
Additionally, over 100 entities within Russia’s defense, manufacturing, technology, transportation, and financial services sectors have been targeted, underscoring Russia’s shift towards a war economy.
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