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New UK rules require crypto exchanges to report sanction breaches

Written by Thu 8 Sep 2022

Crypto

Numerous nations, notably the UK and European states, have placed sanctions on Russia in retaliation for the invasion of Ukraine. However, there are worries that cryptocurrencies like bitcoin are being utilised to circumvent these regulations.

As of August 30th, the official guidance from the Treasury’s Office of Financial Sanctions Implementation has been updated to cover all forms of cryptoassets, such as non-fungible tokens (NFTs) and cryptocurrencies.

Reports have found evidence of Russian gun manufacture, Vladislav Lobaev, fund-raising $21,000 in crypto, which was said to be used to provide ammunition for Russian soldiers in Ukraine. After pressure from the Security Service of Ukraine (SSU), major crypto exchange Binance froze Lobaev’s account.

Binance has also made the move to block the accounts of several Russians with links to the regime, such as the stepdaughter of Russia’s Foreign Minister, Sergei Lavrov, and the daughter of Putin’s Spokesperson, Dmitry Peskov.

While Binance wouldn’t answer questions related to the ownership of the suspected Lobaev wallet, its spokesperson said: “Any government or law enforcement agency in the world can make lawful requests regarding users in their jurisdiction provided these are accompanied by the proper legal authority.”

In practice, all crypto exchanges must now report clients who they suspect of breaching sanctions. If they fail to do so, this will be seen as a criminal offence. These rules follow the decision of the US Treasury to ask crypto exchanges to stop operating in Russia, discussed earlier this year.

Technically, even before this announcement by the Treasury’s Office of Financial Sanctions Implementation, using crypto to evade sanctions was illegal. However, the explicit mention of crypto assets indicates the growing usage of this new asset class to circumvent sanctions.

Written by Thu 8 Sep 2022

Tags:

crypto Europe government UK
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