BY CONNOR STEENS
On the 7th of March 2022, the Financial Crimes Enforcement Network (FinCEN) issued an alert advising all financial institutions to “remain vigilant against potential efforts to evade the expansive sanctions and other imposed restrictions implemented in connection with the Russian Federation’s invasion of Ukraine. Those operating in the international space should consider how these sanctions may affect the conduct of business.
The United States Treasury took action in late February imposing economic measures in partnership with allies and partners to target the core infrastructure of the Russian financial system, and inhibit Russia’s ability to raise capital to fund the invasion into Ukraine.
Executive Order 14024 authorized a number of sanctions against Russian financial services and those operating in the sector, prohibitions on transactions involving specified Russian government entities, designated persons, elites and their family members and further restrictions and blocks on key properties, intelligence-directed disinformation outlets and defense-related firms. The largely state-owned financial services sector will be cut off from external financial infrastructure. Of the largest Russian financial institutions approximately $46 billion worth of foreign exchange transactions are conducted daily, 80% of which are in U.S. dollars, most of which will now be heavily disrupted.
FinCENs alert sets out a number of “red flags” to assist in the identification of potentially evasive activity.