G7 Countries Will Enforce Russia's Misuse of Crypto Assets to
Avoid Sanctions
The leaders
of the Group of Seven (G7) countries jointly issued a statement on Friday
regarding further sanctions on Russia. The statement explains that since
Russian President Vladimir Putin launched an invasion of Ukraine on Feb. 24,
"our countries have imposed expansive, restrictive measures that have
severely compromised Russia’s economy and financial system."
Among the
measures the G7 countries have committed to taking further is "maintaining
the effectiveness of our restrictive measures, cracking down on evasion and
closing loopholes."
The G7 joint
statement explains:
Specifically,
in addition to other measures planned to prevent evasion, we will ensure that
the Russian state and elites, proxies, and oligarchs cannot leverage digital
assets as a means of evading or offsetting the impact of international
sanctions.
The G7
leaders noted that this "will further limit their access to the global
financial system." They stressed, "It is commonly understood that our
current sanctions already cover crypto-assets."
The statement
goes on:
We
are committed to taking measures to better detect and interdict any illicit
activity, and we will impose costs on illicit Russian actors using digital
assets to enhance and transfer their wealth, consistent with our national
processes.
As the
Russia-Ukraine conflict deepens, it was reported last week that G7 nations were
examining ways to stop individuals and companies from using cryptocurrencies to
circumvent expansive sanctions following Russia’s invasion of Ukraine. The
finance ministers and central bank governors of the G7 nations (Canada, France,
Germany, Italy, Japan, the UK, and the US) have held virtual meetings to
address the issue.
Last week, US
Treasury Secretary Janet Yellen voiced her concern too. We will continue to
examine how the sanctions work and assess whether there are any liquid leaks
and whether we can address them.I often hear cryptocurrency mentioned, and that
is a channel to be watched, "she said.
An US
administration official hinted at additional export controls and a slew of new
sanctions in the coming days and weeks to counter all forms of evasion efforts
by Russia. The US Treasury's Financial Crimes Enforcement Network issued an
alert advising financial institutions to be on the lookout for any efforts to
evade sanctions in connection with Russia's war in Ukraine.
The Group of
Seven (G7) countries issued a joint statement stating that they "will
ensure that the Russian state and its elites, proxies, and oligarchs cannot
leverage digital assets as a means of evading or offsetting the impact of
international sanctions." Meanwhile, the U.S. Treasury Department is "closely monitoring
any efforts to circumvent or violate Russia-related sanctions, including
through the use of virtual currency."
The U.S.
Department of the Treasury’s Office of Foreign Assets Control (OFAC) also
issued guidance on Friday "to guard against potential attempts to use
virtual currency to evade U.S. sanctions imposed on Russia." The guidance
emphasizes that all U.S. citizens must "comply with OFAC regulations,
regardless of whether a transaction is denominated in traditional fiat currency
or virtual currency."
The guidance
reads, "U.S. persons, wherever located, including firms that process
virtual currency transactions, must be vigilant against attempts to circumvent
OFAC regulations and must take risk-based steps to ensure that they do not
engage in prohibited transactions," the guidance reads, adding:
OFAC is
closely monitoring any efforts to circumvent or violate Russia-related
sanctions, including through the use of virtual currency, and is committed to
using its broad enforcement authorities to act against violations and to
promote compliance.
US
Treasury Secretary Janet Yellen said that the Treasury is monitoring crypto use
to evade sanctions and the Financial Crimes Enforcement Network (FinCEN) issued
red flags on potential sanctions evasion using cryptocurrency.
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