The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has imposed sanctions on 13 entities and two individuals for operating in the financial services and technology sectors of the Russian economy, including those developing or offering services in virtual assets which allegedly enable the diversion of financial assets. US sanctions, as reported by the Treasury Department on Tuesday, March 26. Five entities were designated because they were owned or controlled by OFAC designees.
According to the Treasury Department, many designated individuals and entities have facilitated transactions or provided services that have helped OFAC-designated entities evade sanctions. These designations follow OFAC’s action earlier this year, which targeted companies against Russia’s core financial infrastructure and curtailed Russia’s use of the international financial system to finance its war against Ukraine.
Brian E. Nelson, Treasury Under Secretary for Terrorism and Financial Intelligence, said:
“As the Kremlin seeks to strengthen entities in the financial technology space, the Treasury Department will continue to expose and disrupt the companies that seek to help sanctioned Russian financial institutions reconnect with the global financial system.”
The sanctioned companies include Moscow-based fintech companies B-Crypto, Masterchain, Laitkhaus and Atomaiz, which allegedly collaborated with or provided services to several OFAC-designated Russian banks, such as Rosbank, VTB Bank, Sberbank and Sovcombank , to cross-border settlements, issue digital financial assets and tokenize precious metals and diamonds. Tokentrust Holdings Ltd., based in Cyprus and majority shareholder of Atomaiz, was also appointed.
Other sanctioned entities include Veb3 Tekhnologii and Veb3 Integrator, Moscow-based technology companies that provide blockchain solutions and platforms to clients such as Sberbank and Alfa-Bank, also naming their majority shareholder Igor Veniaminovich Kaigorodov. TOEP, a Moscow-based fintech company that operates a virtual currency exchange under the company names Netexchange and Netex24, was sanctioned for facilitating digital payments in rubles and virtual currencies to OFAC-designated entities such as Sberbank, Alfa-Bank and Hydra Market , with the owner and director Timur Evgenyevich Bukanov is also designated.
The Treasury Department also targeted Bitpapa, a peer-to-peer virtual currency exchange that has conducted transactions worth millions of dollars with OFAC-designated Russian entities Hydra Market and Garantex, and Crypto Explorer, a Russia and UAE-based virtual currency exchange offering conversions between UAE virtual currencies, rubles and dirhams, as well as cash services in its Moscow and Dubai offices.
In addition to the crypto-related sanctions, OFAC has designated several companies associated with the OFAC-designated Echelon Union for Science and Technology, a Moscow-based entity licensed by the Russian Federal Security Service and the Russian Ministry of Defense, for activities in the technology sector. sector of the Russian economy.
As a result of these actions, all property and interests in property of the designated persons in the United States or the possession or control of U.S. persons are foreclosed and must be reported to OFAC. The Treasury Department also warned that foreign financial institutions that conduct or facilitate significant transactions or provide services involving Russia’s military-industrial base are at risk of sanctions by OFAC.
The sanctions are intended to disrupt Russia’s ability to use alternative payment mechanisms and use financial technology entities to circumvent US sanctions and continue financing the war against Ukraine. As the Treasury Department continues to monitor and respond to Russia’s evolving sanctions evasion tactics, it remains committed to upholding the integrity of the international financial system and pressuring Russia to change its behavior.
