US gov nails fintech firms for helping Russia fund Ukraine war

The US Treasury Department has singled out over a dozen fintech companies for actively helping Russia circumvent G7 sanctions – put in place to prevent the Kremlin from using international money to fund its war on Ukraine.

The Treasury’s foreign intel unit, the Office of Foreign Assets Control (OFAC), identified thirteen technology and crypto entities, known for operating and doing business with the Russian Federation.

The fintechs were said to be helping the Kremlin obtain international funds by either building or operating blockchain-based services or enabling virtual currency payments, all in violation of G7 sanctions.

“Russia is increasingly turning to alternative payment mechanisms to circumvent US sanctions and continue to fund its war against Ukraine,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson.

OFAC’s job is to monitor and take action against entities not in alignment with US national security and foreign policy objectives – in this case, supporting last month’s renewed push by the Group of Seven to enforce its sanctions against Russia.

The G7 had stated in February it would “impose additional sanctions on companies and individuals in third countries who help Russia acquire weapons or key inputs for weapons.”

Most of the fintech companies were Moscow-based, with one partly based in the UAE, one in Cyprus, and another in Estonia.

The blockchain and crypto entities included both virtual and peer-to-peer (P2P) cryptocurrency exchanges, blockchain platforms, and even one that focused on tokenizing precious metals and diamonds.

The three technology and cybersecurity firms targeted by OFAC are said to be subsidiaries of Echelon Technologies (already on the OFAC sanction list) and known to be either directly or indirectly owned by the Russian Ministry of Defense.

Any persons, transactions and/or property associated with with the 13 identified entities will be blocked, including any other firms with more than a 50% stake in those entities.

Financial services and transactions can include maintaining accounts, transferring funds, payment processing, trade finance, insurance, etc., either inside or outside Russia.

“As the Kremlin seeks to leverage entities in the financial technology space, Treasury will continue to expose and disrupt the companies that seek to help sanctioned Russian financial institutions reconnect to the global financial system,” Nelson said.

OFAC notes that any foreign financial institutions conducting or facilitate significant transactions or services involving Russia’s military-industrial base run the risk of being sanctioned.

Besides the US, members of the informal bloc of G7 industrial nations, include Canada, France, Germany, Italy, Japan, and the United Kingdom.