Investigation shows that Russian crypto exchanges are secretly helping money laundering
One of the reasons regulators frown on crypto transactions is anonymity. For example, with crypto mixers like Tornado Cash, crypto users can send and receive money without compromising their personal information.
Unfortunately, this system also enables criminals to evade authorities, especially when transferring money obtained from illicit funds. That is why many regulators in different countries follow strict anti-money laundering (AML) laws and Know Your Customer (KYC) measures.
But it seems that setting up these laws isn’t enough if crypto exchanges don’t do their part to enforce them. A recent report has revealed that some crypto exchanges in Russia accepted a money laundering drive to take USDT and give GBP cash in London.
Eight Crypto Exchanges in Russia Avoid UK AML, TI
In a recent survey by Transparency International, eight crypto exchanges based in Moscow showed a willingness to support a money laundering attempt. The researchers exchanged telegram messages with these exchanges, even stating the huge amount involved in the transaction, but they were not discouraged. The exchanges were ready to accept USDT in Moscow City and give GBP cash to a contact in London.
IN report, TI noted that Moscow City houses many suppliers and service companies to meet the various needs of the visitors. As such, it is possible to find crypto exchanges in Moscow city that are willing to help customers transfer money out of the country.
Since citizens cannot use Russian-issued cards abroad, they rely on other means to transfer money to other countries and get cash there. This is why crypto has become a better option, as no one questions the buyer’s source of income during the transaction.
So the investigators focused on finding crypto exchanges that accept cash, exchange stablecoins and those willing to buy stablecoins in Russian and offer cash abroad. The main stable coin in focus was USDT as it is free from price volatility.
After determining the target, TI searched the web and found 21 exchanges in Moscow city. It then surveyed the exchanges and discovered 14 over-the-counter (OTC) brokers. After much discussion with the exchanges, Transparency International discovered that 8 of the 21 were ready to exchange USDT for GBP cash in London.
The eight digital asset exchanges listed in the report were Pridechange, Bitokk, Alfa Exchange, Suex, Finex24, Mychange, Trust Exchange and 24expay. Transparency International also provided links to their respective websites in the report. It also revealed that OFAC sanctioned the Suex exchange in 2021 for facilitating transactions for ransomware hackers. As a result, the website is currently down.
UK Crypto Regulation
UK digital businesses have been operates under anti-money laundering rules since 2020. According to UK regulation, crypto firms fall under the jurisdiction of the Financial Conduct Authority (FCA). The body mainly focuses on supervision of digital assets for AML. However, digital asset firms that are not subject to the FCA but handle large amounts of cash must register with the Her Majesty’s Revenue and Customs (HMRC).
The aim of imposing these laws on the UK crypto industry is to avoid money laundering cases, just like the current one. In particular, when TI asked these exchanges to agree to facilitate money laundering, 24expay refused to offer such services and had no offices in London.
On the other hand, Bitokk stated that it complies with AML laws in transactions as recommended by the FATF. Finex24 claimed they had no UK partner and have never traded crypto for GBP. It also revealed that the company is registered in Lithuania and works with an AML officer.
Featured image from Pixabay and chart from Tradingview.com
