Treasury Designates Virtual Currency Money Launderer for Russian Elites and Cybercriminals US Department of the Treasury

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BuildingppLibraryppCuratorppBureau of Engraving and PrintingppUS MintppPress ContactsppWeekly Public Schedule ArchiveppWebcastsppMedia Advisories ArchiveppSubscribe to Press ReleasesppTreasury imposes consequences on money launderer responsible for moving funds on behalf of Russian elites and ransomware actorsppWASHINGTON Today the Department of the Treasurys Office of Foreign Assets Control OFAC sanctioned Ekaterina Zhdanova a Russian national for her role in laundering and moving funds using virtual currency on behalf of Russian elites This action is consistent with the G7s commitment to crack down on sanctions evasion and closing loopholes that allow the Russian state its elites proxies and oligarchs to leverage virtual currency to offset the impact of international sanctions ppThrough key facilitators like Zhdanova Russian elites ransomware groups and other illicit actors sought to evade US and international sanctions particularly through the abuse of virtual currency said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E Nelson We remain focused on safeguarding the US and international financial system against those who seek to exploit this technology among other illicit finance risks in the virtual assets ecosystemppIn response to Russias illegal invasion of Ukraine in February 2022 OFAC has imposed expansive economic sanctions on the Russian financial system In March 2022 Ekaterina Zhdanova Zhdanova assisted a Russian client in obfuscating their source of wealth in order to transfer over 23 million into Western Europe through a fraudulently opened investment account and real estate purchases Zhdanovas services result in the provision of access to Western financial markets for Russian individuals that may otherwise be blocked due to US and international prohibitions This type of illicit financial activity can be used to evade the multilateral US and international sanctions that impose costs on Russia for its unprovoked war and deny the access of sanctioned Russian individuals and entities to the international financial systemppZhdanova uses virtual currency to facilitate large cross border transactions  Zhdanova utilizes entities that lack AntiMoney LaunderingCombatting the Financing of Terrorism AMLCFT controls such as OFACdesignated Russian cryptocurrency exchange Garantex Europe OU Garantex Garantex was designated by OFAC in 2022 pursuant to Executive Order EO 14024 for operating or having operated in the financial services sector of the Russian Federation economy Garantex was known for blatantly disregarding AMLCFT obligations and allowing its platform to be used by illicit actors  ppZhdanova relies on multiple methods of value transfer to move funds internationally This includes the use of cash and leveraging connections to other international money laundering associates and organizations Zhdanova also uses traditional businesses to maintain access to the international financial system including through a luxury watch company that has offices around the world ppZhdanova conducts virtual currency exchange transfers on behalf of oligarchs who have relocated internationally In one instance a Russian oligarch sought out Zhdanova to move over 100 million in wealth on their behalf to the United Arab Emirates Additionally Zhdanova has facilitated a United Arab Emirates tax residency service for Russian clients and possibly participated in obfuscating their identities Through this service Zhdanova provided clients with United Arab Emirates tax residency a United Arab Emirates identification card and a bank account Payments were alleged to be made in cash or by virtual currency and to be received at a Dubai bank account and then transferred from the Dubai bank account to foreign bank accounts at the discretion of the client A benefit of this service was to create an origin of funds for the client that would be managed from anywhere in the world without additional questions from international authorities  ppZhdanova also provided services to individuals connected with the Russian Ryuk ransomware group In 2021 Zhdanova laundered over 23 million of suspected victim payments on behalf of a Ryuk ransomware affiliate Ryuk has been used to target thousands of victims worldwide including in the United States across a variety of sectors In October 2022 US law enforcement specifically identified Ryuk as an imminent and increasing cybercrime threat to hospitals and healthcare providers in the United States  ppEkaterina Zhdanova is being designated today pursuant to EO 14024 for operating or having operated in the financial services sector of the Russian Federation economyppAs a result of todays action all property and interests in property of the designated person described above that are in the United States or in the possession or control of US persons are blocked and must be reported to OFAC In addition any entities that are owned directly or indirectly individually or in the aggregate 50 percent or more by one or more blocked persons are also blocked Unless authorized by a general or specific license issued by OFAC or exempt OFACs regulations generally prohibit all transactions by US persons or within or transiting the United States that involve any property or interests in property of designated or otherwise blocked person ppIn addition financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action The prohibitions include the making of any contribution or provision of funds goods or services by to or for the benefit of any designated person or the receipt of any contribution or provision of funds goods or services from any such person ppThe power and integrity of OFAC sanctions derive not only from OFACs ability to designate and add persons to the SDN List but also from its willingness to remove persons from the SDN List consistent with the law The ultimate goal of sanctions is not to punish but to bring about a positive change in behavior For information concerning the process for seeking removal from an OFAC list including the SDN List please refer to OFACs Frequently Asked Question 897 here For detailed information on the process to submit a request for removal from an OFAC sanctions list please click hereppClick here for more information on the individual designated todayppSee OFACs Updated Advisory on Potential Sanctions Risk for Facilitating Ransomware Payments here for information about actions that OFAC would consider to be mitigating factors in any related enforcement action involving ransomware payments with a potential sanctions risk For information on complying with sanctions applicable to virtual currency see OFACs Sanctions Compliance Guidance for the Virtual Currency Industry hereppp