Investigation Shows Russian Crypto Exchanges Are Secretly Aiding Money Laundering

Read full article at Bitcoinist.

One of the reasons regulators frown at crypto transactions is anonymity. For instance, with crypto mixers such as 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 illegal means. That’s why many regulators in different countries pursue stringent Anti-Money Laundering (AML) laws and Know Your Customer (KYC) measures.

But it seems that setting up these laws is not enough if crypto exchanges don’t do their part in enforcing them. A recent report has revealed that some crypto exchanges in Russia accepted a money laundering run to take USDT and give GBP cash in London. 

Eight Crypto Exchanges In Russia Evading The UK AML, TI

In a recent investigation 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 weren’t discouraged. The exchanges were ready to accept USDT in Moscow City and give GBP cash to a contact in London. 

In the report, TI noted that Moscow City houses many vendors and service firms to meet the diverse needs of its visitors. As such, it is possible to find crypto exchanges in Moscow City 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 funds to other countries and get cash there. This is why crypto has become a better alternative, as no one questions the buyer’s income source 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 stablecoin of focus was USDT since it is free from price volatility.

After determining the target, TI searched online and found 21 exchanges located in Moscow City. Then it examined the exchanges and discovered 14 over-the-counter (OTC) brokers. After much discussion with the exchanges, Transparency International discovered that 8 out 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’s Crypto Regulation

Digital businesses in the UK have been operating under anti-money laundering rules since 2020. According to UK regulation, crypto firms fall under the Financial Conduct Authority’s (FCA) jurisdiction. The body mainly focuses on supervising digital assets for AML. However, digital asset businesses not under the FCA but handling vast amounts of cash must register with 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 present one. Notably, when TI asked these exchanges about agreeing to facilitate money laundering, 24expay denied offering such services and maintained no offices in London. 

On the other hand, Bitokk stated that it complies with the AML laws in transactions as recommended by the FATF. Finex24 maintained that it had no UK partner and hasn’t ever exchanged crypto for GBP. It also disclosed that its company is registered in Lithuania and works with an AML officer.

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