FinCEN Advises Increased Vigilance for Potential Russian Sanctions Evasion Attempts

FIN-2022-Alert001 March 7, 2022
FinCEN Advises Increased Vigilance for Potential Russian Sanctions Evasion Attempts

1. See 31 U.S.C. § 5312(a)(2); 31 CFR § 1010.100(t).
2. For relevant U.S. Department of the Treasury Office of Foreign Asset Control (OFAC) actions against the Russian
   Federation and the Republic of Belarus, see OFAC Recent Actions | U.S. Department of the Treasury. For additional information on compliance with OFAC obligations, see the Summary of Relevant OFAC Compliance Obligations section of this alert. For relevant U.S. Department of Commerce Bureau of Industry and Security actions, see U.S. Department of Commerce. For relevant U.S. Department of State actions, see U.S. Department of State. For other relevant U.S. government measures and actions, see The White House.
3. Many of the red flag indicators highlighted in this alert were previously identified in other FinCEN advisories
   and represent only a sampling of indicators of possible sanctions evasion activity and should not be considered an exhaustive list. Further, because no single financial red flag indicator is determinative of illicit or suspicious activity, financial institutions should consider the relevant facts and circumstances of each transaction, in keeping with their risk-based approach to compliance.
4. See FinCEN Guidance, “Application of FinCEN’s Regulations to Certain Business Models Involving Convertible
   Virtual Currencies,” (May 9, 2019).
5. See 31 CFR § 1010.540.
6. See Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
   Act of 2001 (‘‘USA PATRIOT Act’’) (Pub. L. 107–56).
7. See Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, FinCEN, National
   Credit Union Administration, and Office of the Comptroller of the Currency, “Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing,” (December 3, 2018). The Financial Crimes Enforcement Network (FinCEN) is alerting all financial institutions1 to be vigilant against efforts to evade the expansive sanctions and other U.S.-imposed restrictions implemented in connection with the Russian Federation’s further invasion of Ukraine.2 The United States is committed to supporting Ukraine, and, along with key U.S. partners and allies around the globe, has imposed unprecedented economic pressure measures on Russia and Belarus. This alert provides select red flags3 to assist in identifying potential sanctions evasion activity and reminds financial institutions of their Bank Secrecy Act (BSA) reporting obligations, including with respect to convertible virtual currency (CVC). It is critical that all financial institutions, including those with visibility into CVC flows, such as CVC exchangers and administrators—generally considered money services businesses (MSBs)4 under the BSA—identify and quickly report suspicious activity associated with potential sanctions evasion, and conduct appropriate risk-based customer due diligence or, where required, enhanced due diligence (see Reminder of Relevant BSA Obligations below). FinCEN also strongly encourages all financial institutions to make full use of their ability to share information consistent with Section 314(b)5 of the USA PATRIOT Act,6 and consider how the use of innovative tools and solutions may assist in identifying hidden Russian and Belarusian assets.7 Suspicious Activity Report (SAR) filing request FinCEN requests financial institutions reference this alert in SAR field 2 (Filing Institution Note to FinCEN) and the narrative by including the following key term:
   “FIN-2022-RUSSIASANCTIONS”