The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has taken decisive action against money laundering activities involving virtual currency. In a bid to curb the exploitation of virtual assets to evade international sanctions, OFAC has imposed sanctions on Ekaterina Zhdanova, a Russian national.
Zhdanova is accused of playing a significant role in laundering and transferring funds for Russian elites using digital currencies. This move underscores the United States’ commitment to safeguarding the global financial system from illicit financial activities, particularly those involving cryptocurrencies.
Sanctions against Ekaterina Zhdanova
The US Treasury announced sanctions on Ekaterina Zhdanova as part of its broader crackdown on Russian states, elites, and individuals who employ virtual currencies to circumvent international sanctions. Zhdanova’s alleged involvement in facilitating illicit financial activities using virtual currencies has drawn the attention of US authorities.
According to Treasury officials, Zhdanova helped a client in Russia obscure their wealth and illicitly transfer over $2.3 million into Western Europe. This was achieved through fraudulent practices, including the opening of investment accounts and real estate purchases. Such illicit financial activities not only undermine the global financial system’s integrity but also enable individuals and entities to avoid the consequences of international sanctions imposed on Russia.
Exploiting OFAC-designated crypto exchange
Zhdanova is reported to have used the OFAC-designated Russian cryptocurrency exchange, Garantex Europe OU, in her operations. This exchange has come under scrutiny for blatantly disregarding Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) obligations, making it a preferred choice for illicit actors in the cryptocurrency space. The utilization of such platforms further highlights the need for enhanced regulatory oversight in the crypto industry.
Zhdanova’s role extended to managing virtual currency transfers for Russian oligarchs who relocated worldwide. One notable instance involved assisting a Russian oligarch in moving over $100 million to the United Arab Emirates. These activities pose significant challenges to efforts aimed at imposing financial sanctions on individuals and entities associated with Russia.
United Arab Emirates tax residency service
Additionally, Zhdanova is alleged to have been involved in providing a “United Arab Emirates tax residency service” for clients in Russia. This service included offering clients United Arab Emirates tax residency, identification cards, and bank accounts. Payments were reportedly made in cash or through virtual currency, with funds received in a Dubai bank account and later transferred to foreign bank accounts at the discretion of the client.