Binance’s founder and chief executive officer (CEO), Changpeng Zhao, a Canadian national, also pleaded guilty to failing to maintain an effective anti-money laundering (AML) program, in violation of the BSA and has resigned as CEO of Binance. According to a statement by the Department of Justice, it is the largest corporate resolution to include criminal charges for an executive.

Binance’s guilty plea is part of coordinated resolutions with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) and the U.S. Commodity Futures Trading Commission (CFTC).

“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed. Now it is paying one of the largest corporate penalties in U.S. history,” said Attorney General Merrick Garland. “In just the past month, the Justice Department has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases. The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal.” Garland is referring to the conviction of Sam Bankman-Fried, founder of crypto exchange FTX. A jury found Bankman-Fried guilty of 7 counts of fraud in early November.

“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” said Secretary of the Treasury Janet L. Yellen. “Today’s historic penalties and monitorship to ensure compliance with U.S. law and regulations mark a milestone for the virtual currency industry. Any institution, wherever located, that wants to reap the benefits of the U.S. financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime or face the consequences.”

“From the beginning of its existence, Binance and founder Changpeng Zhao chose growth and personal wealth over following financial regulations aimed at stopping the laundering of criminal cash,” said Acting U.S. Attorney Tessa M. Gorman for the Western District of Washington. “Because Changpeng Zhao knowingly operated a financial platform without basic anti-money laundering safeguards, the company caused illegal transactions between U.S. users and users in sanctioned jurisdictions such as Iran, Cuba, Syria, and Russian-occupied regions of Ukraine – transactions for which Binance profited with significant fees.”

Lack of Controls

According to court documents, Binance admitted to prioritizing growth and profits over compliance with U.S. law. Binance launched in 2017 and focused on attracting high-volume customers, including U.S.-based customers. Binance quickly became the largest cryptocurrency exchange in the world, with the greatest share of its customers coming from the United States. As a result of serving U.S. customers, Binance was required to register with FinCEN as a money services business and to implement an effective AML program that was reasonably designed to prevent Binance from being used to facilitate money laundering. Binance chose not to comply with U.S. law and failed to implement controls and procedures to prevent money laundering. Binance also did not implement controls that would have prevented U.S. customers from conducting transactions with customers in sanctioned jurisdictions, despite knowing that the system it used to match customers for transactions would necessarily cause transactions in violation of IEEPA.

Instead of complying with U.S. law, in 2019, Binance announced that it would block U.S. customers and launched a separate U.S. exchange, Binance.US. Despite this announcement, Binance took steps to maintain a substantial number of U.S. customers. In particular, Binance focused on retaining valuable “VIP” customers, which were responsible for a large portion of Binance’s trading volume and revenue. These VIP customers were critical to Binance’s business because they helped provide the necessary liquidity to facilitate trades of digital assets. For example, Binance executives, including Zhao, made a plan to contact VIP customers and help the VIP register a new account for an offshore entity and transfer holdings to that account. Binance employees also called U.S. VIPs to encourage them to provide information that suggested the customer was not located in the United States.

No Effective AML Program

Binance also did not implement the core components of an effective AML program: Binance did not implement comprehensive know-your-customer (KYC) protocols or systematically monitor transactions, and Binance never filed a suspicious activity report (SAR) with FinCEN. For years, Binance allowed users to open accounts and trade without submitting any identifying information beyond an email address. Binance began requiring all users to provide KYC information in August 2021 but allowed users who had not provided KYC to continue trading on the exchange until May 2022. Between August 2017 and October 2022, U.S. users, including VIPs, conducted trillions of dollars in transactions on the platform, generating over $1.6 billion in profit for Binance.

As Binance’s internal communications showed, Binance’s compliance employees recognized that Binance did not have protocols to flag or report transactions for money laundering risks, which employees recognized would attract criminals to the exchange. As one compliance employee wrote, “we need a banner ‘is washing drug money too hard these days – come to binance we got cake for you.’” Due in part to Binance’s failure to implement an effective AML program, illicit actors used Binance’s exchange in various ways, including conducting transactions for mixing services that obfuscated the source and ownership of cryptocurrency; transferring illicit proceeds from ransomware variants; and moving proceeds of darknet market transactions, exchange hacks, and various internet-related scams.

Violation of Sanctions Laws

Binance also knew that U.S. sanctions laws prohibited U.S. persons – including its U.S. customers – from trading with its customers subject to U.S. sanctions, including customers in comprehensively sanctioned jurisdictions, such as Iran. Binance knew that it had a significant number of users from comprehensively sanctioned jurisdictions and a substantial number of U.S. users and that its matching engine would necessarily cause U.S. users to transact with users in sanctioned jurisdictions in violation of U.S. law. Nonetheless, Binance did not implement controls that would prevent U.S. users from trading with users in Iran; and, because of this intentional failure, between January 2018 and May 2022, Binance willfully caused over $898 million in trades between U.S. users and users ordinarily resident in Iran.

Details of the Plea Agreement

As part of the plea agreement, Binance has agreed to forfeit $2,510,650,588 and to pay a criminal fine of $1,805,475,575 for a total financial penalty of $4,316,126,163. Binance has also agreed to retain an independent compliance monitor for three years and remediate and enhance their anti-money laundering and sanctions compliance programs. Binance separately has also reached agreements with the CFTC, FinCEN, and OFAC, and the Department will credit approximately $1.8 billion toward those resolutions.

The Department reached its resolution with Binance based on a number of factors, including the nature, seriousness, and pervasiveness of the offense, as a result of which Binance processed billions of dollars of cryptocurrency transactions for U.S. persons and caused U.S. customers to engage in transactions in violation of U.S. sanctions. Binance did not make a timely and voluntary disclosure of wrongdoing, but it received partial credit for its cooperation with the Department’s investigation, and it has taken steps to remediate its compliance program. Binance did not receive full credit for its cooperation because it delayed producing relevant evidence, including recorded meetings in which Binance executives discussed U.S. legal requirements. Accordingly, the total criminal penalty reflects a 20% reduction off the bottom of the applicable U.S. sentencing guidelines fine range.

In addition, according to court documents, Zhao, Binance’s founder, owner, and CEO, admitted that he understood that Binance served U.S. users and was thus required to register with FinCEN and implement an effective AML program. Zhao knew that U.S. users were essential to Binance’s growth and were a significant source of revenue and knew that an effective AML program would include KYC protocols that would mean that some customers would choose not to use Binance. Zhao told employees it was “better to ask for forgiveness than permission,” and prioritized Binance’s growth over compliance with U.S. law. Without an effective AML program, Binance caused transactions between U.S. users and users in jurisdictions subject to U.S. sanctions. These illegal transactions were a clear and foreseeable result of Zhao’s decision to prioritize Binance’s profit and growth over compliance with the BSA.  

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Rapidly changing elements of digital finance and geopolitical dynamics mean organizations need to continuously adapt and improve sanctions screening programs and AML measures for compliance programs to maintain their effectiveness and integrity. Regulatory enforcement of sanctions violations also appears to be on the rise. Managing sanctions risk has become more complex than ever.

To cope with this pressure and stay compliant, organizations need a strong sanctions screening program—one that achieves a healthy balance between data demands, compliance posture, and operational equilibrium.

Avoiding Data Malnutrition

Access to accurate, high-quality data is essential for a healthy sanctions screening program. Screening effectiveness can be compromised when dealing with incomplete or inaccurate data, resulting in an overwhelming number of alerts and false positives and increasing the risk of overlooking false negatives.

Compliance teams need to screen customers and transactions against a myriad of constantly changing sanctions lists that update often with new sanctions, modified existing ones, and some being removed.

Screening data needs to include both sanctions and customer data, which are the backbone of any healthy screening program. These insightful data sets enable businesses to accurately screen their customers (both existing and new) and transactions against the latest sanctions lists and prevent inadvertent engagement with sanctioned parties.

Additionally, there are a multitude of sanctioning bodies, including sovereign states, regional unions, and international organizations such as the Office of Foreign Assets Control that enforce their own sanctions—and these lists do not always align. Each sanctioning body has its own unique way of organizing and disseminating the data, which can create complexities in integrating and comparing the information.

Navigating through a variety of formats and sizes of sanctions lists, keeping track of frequent updates and ensuring real-time screening requires continuous effort and resources. This means organizations should use extensively researched and up-to-date global risk information that includes the latest Politically Exposed Persons and sanctions lists as well as adverse media and enforcement records from all corners of the world.

Even so, the strength of external data alone is not enough. The quality of customer data is equally important. Streamlining data acquisition processes and enriching customer and third-party data is a must. Organizations should invest time at the very front of their screening processes to cleanse and prepare their data. Conducting an internal data quality assessment will greatly improve process efficiency, saving time in unnecessary remediation.

Today’s high-risk global marketplace also means organizations need to have a clear understanding of their prospective customers and proactively assess the risks they may bring to their business. It’s not only customers, however, who can present sanctions risk. A comprehensive screening program encompasses a list of various entities connected to the organization’s operations including associates, beneficial owners, and the extended supply chain. Regularly reviewing and updating internal and external data is crucial for businesses, as regulatory bodies around the world constantly evolve their rules and restrictions to address geopolitical tensions, financial crimes, and global security concerns.

Strengthening Compliance’s Analytics Capabilities

Access to more accurate, high-quality data is critical for productive screening. While vast amounts of data can deliver deep insights, however, the sheer volume can cause problems for organizations seeking to identify suspicious activity that could constitute compliance risk.

This is where technology automation has a lot to offer. Applying powerful analytics and machine-learning techniques to screening programs helps accurately record, cross-reference, and analyze massive quantities of data and variables. This has distinct benefits when it comes to customer, vendor, and third-party screening as this activity requires the aggregation of disparate data sources including internal systems and external sources.

The world’s rapidly evolving regulatory landscape is increasing demand for organizations to proactively manage risk on a daily and sometimes hourly basis. As challenges continue to grow, it becomes imperative for tools and strategies to evolve accordingly. By harnessing the power of collecting, managing, and analyzing both external and internal data, organizations can gain strategic advantages in risk management. Embracing the latest technologies empowers them to proactively identify, manage, mitigate, and prevent risks effectively.

Organizations can use this increased capability to interrogate their records and identify screening issues earlier so they can move from a reactive to a proactive compliance posture and prevent or neutralize threats before they become a problem. Automating previously manual, time-consuming processes helps to reduce costs, improve compliance efficiency, and free up human resources for tasks that require emotional intelligence.

Boosting Operational Metabolism

One of the greatest challenges organizations face when it comes to sanctions screening is managing frequent alerts and false positives. This is particularly true for legacy systems that rely on fuzzy matching and rules-based screening, as these methods have limitations that make them less effective in handling the complexity of sanctions and countless changes to watchlists.

To address these challenges and reduce the number of false positives, businesses should turn to more advanced technologies such as machine learning and big data analytics. Modernizing legacy technology is a critical first step, ideally followed by a thorough analysis of the quality of the data organizations hold, as data gaps and inaccuracies can compromise screening effectiveness. Finally, organizations should avoid treating all false positives as equal without considering the likelihood of a match and the varying levels of risk. Using entity resolution tools can achieve this.

Deploying entity resolution tools to assess the relevance scores for alerts helps organizations transition from a perspective of quantity to one focused on quality. These tools help consolidate and link records that refer to the same real-world entity, even if the data points have slight variations or discrepancies, enhancing the screening process with improved relevance and matching precision for handling false positives.

Rather than relying on a rules-based method to accept or reject matches, entity resolution employs sophisticated analytics and accurate entity linking to match data points and assess the probability that two database records represent the same real-world individual, company, or entity. This process eliminates irrelevant data, enabling it to effectively identify matches and uncover concealed relationship risks.

This approach provides a quantitative assessment of customer risk, evaluating the strength of the match between a customer account and a watchlist entity. It focuses on identifying matches that merit immediate attention, ensuring a more targeted and efficient risk management process.

As the wellness of sanctions screening and AML programs faces ongoing pressures and emerging threats, innovative, more holistic approaches to screening are necessary. By leveraging the latest technology and engaging a high-quality, dynamic, and global data organization can enhance their match precision and prioritized risk ranking, resulting in a more accurate and effective screening process.

Forward-thinking organizations will gain stronger control over false positives and be able to achieve the much-needed balance between strong compliance posture and operational efficiency.

Grayson Clarke is senior vice president of LexisNexis Risk Solutions.

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According to OFAC, the violations occurred between November 2013 and August 2017, when Danfoss FZCO—Danfoss’s wholly owned UAE subsidiary—sold cooling and heating equipment and related components to customers in Sudan, Syria, and Iran. During this period, Danfoss FZCO employees directed these customers to remit payments to at least three accounts at banks located in the UAE, including Danfoss’s U.S. branch account. Danfoss FZCO’s customers in Iran, Syria, and Sudan used third-party payers, such as money exchangers in non-sanctioned jurisdictions, to pay Danfoss FZCO at this account. Danfoss FZCO also used third-party payers to make five transfers from its U.S. financial institution to parties in Syria and Iran.

The use of third-party payers disguised the originator or beneficiary of these transactions. As a result, the payments at issue were not stopped by the bank’s transactional screening filters. The total value of all transfers was approximately $17 million.

Sanctions Compliance lapses

Since at least 2011, the company knew of the sanctions risks it was facing, even ignoring warnings from compliance personnel. For example, “in February 2016 Danfoss’ compliance division discovered that an Iranian customer had been invoiced in U.S. dollars and advised Danfoss FZCO that such activity was impermissible.” Still, the subsidiary continued to use its U.S. branch account to collect payments from customers in sanctioned jurisdictions until August 2017, according to OFAC.

The violations occurred “primarily because of deficiencies in Danfoss’s global sanctions compliance program,” which “did not have in place procedures to regularly monitor Danfoss FZCO’s activities to identify potential sanctions issues. As a result, Danfoss lacked the means to know when problems arose, unless Danfoss FZCO proactively contacted Danfoss’ compliance program manager.

Danfoss FZCO personnel, including the regional finance director, did not have substantive training on U.S. sanctions and did not consult with Danfoss’ compliance program manager on the transactions giving rise to the apparent violations. “This insufficient understanding of U.S. sanctions left the regional finance director with a lack of urgency to address Danfoss FZCO’s banking issues and substantially contributed to the delay in stopping the violative transactions,” OFAC said.

Danfoss’s financial institution notified the company of the violations in May 2017, when they were identified. In October 2017, Danfoss disclosed them to OFAC, which was” already in possession of relevant information and assessed that Danfoss’ submission did not qualify as a voluntary self-disclosure,” OFAC said.

Mitigating Factors for Danfoss

OFAC said the settlement amount reflects its determination that Danfoss did not voluntarily self-disclose the apparent violations and that the apparent violations constitute a non-egregious case. Among the mitigating factors OFAC considered is that Danfoss “has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the apparent violations.”

Secondly, Danfoss acted quickly to ascertain the root causes of the conduct at issue and “adopted new and more effective internal controls and procedures” to prevent a recurrence of the violations. These measures included:

• Ceasing doing business entirely in Iran, Syria, and Sudan;
• Developing a new procedure for monitoring and documenting payments to its U.S. bank accounts to identify true originators and reject any payments that originate from a sanctioned jurisdiction;
• Updating its Export Control Standards and its Export Control Manual to contain sections that specifically highlight the roles and responsibilities of all employees to address specific U.S. sanctions regulations compliance, and released several new required forms, announcements, and supporting documentation to reinforce its employees’ understanding of U.S. export controls and sanctions and to help employees identify sanctions compliance red flags; and
• Creating a sanctions manual specifically for Danfoss FZCO and implemented training for Danfoss FZCO employees to make clear their obligations under U.S. sanctions and the risks specific to doing business in the Middle East.

Lastly, according to OFAC, “Danfoss was highly cooperative in providing relevant information and responding to all OFAC requests for information in a timely manner. Danfoss also agreed to toll the statute of limitations for the apparent violations.”

Compliance lessons

OFAC highlighted several lessons learned from its enforcement action against Danfoss. Those lessons include the following:

Be aware of the risks posed by U.S. financial institutions in commercial activity involving an OFAC-sanctioned country, region, or person. “Commercial activity that might not otherwise violate OFAC regulations—such as the sale of non-U.S. goods by a non-U.S. person to an entity in an OFAC-sanctioned country—can nonetheless cause a violation when the financial transactions related to that activity are processed through or involve U.S. financial institutions,” OFAC said.

Maintain an effective, risk-based sanctions compliance program and train key staff, including senior management, to identify and escalate potential U.S. sanctions violations to the appropriate compliance personnel. “It is particularly important to implement controls specific to the risks posed by the regions in which subsidiaries operate, and any risks stemming from specific business practices, such as accepting payments from third parties,” OFAC said.

Consider OFAC guidance and advisories to inform and strengthen sanctions compliance programs. In January 2013, OFAC published an advisory that alerted U.S. financial institutions to Iranian efforts to circumvent U.S. sanctions, especially risks arising from the use of third-country exchange houses and trading companies acting as money transmitters in support of business with Iran. “Even where a non-U.S. company engages in otherwise permissible trade with Iran,” OFAC said, “knowledge of the risks described in the advisory may help the company avoid engaging in prohibited dealings with U.S. financial institutions and other persons.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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In Transparency International’s report, “Exporting Corruption 2022,” 43 signatories to the OECD Anti-Bribery Convention were assessed, along with China, India, Hong Kong SAR, and Singapore. Together, the countries analyzed account for almost 85 percent of all global exports, with OECD member countries accounting for almost two-thirds.

The report is meant to complement the OECD Working Group on Bribery’s (WGB) monitoring of country implementation of the OECD Anti-Bribery Convention in successive phases.

According to Transparency International, just two of the 47 largest exporting countries in the world—the United States and Switzerland—are “active enforcers,” meaning they investigate, charge, and impose sanctions commensurate with their share of global exports (11.8 percent in combination). However, even the United States pursued “significantly fewer cases in 2021,” Transparency International said in a blog post.

“From the inception of our categories in 2009, the percentage of global exports coming from ‘active enforcers’ had remained above 20 percent— nearly twice this year’s percentage—until it began to drop in 2020,” Transparency International said.

Two former “active” enforcers—the United Kingdom and Israel—dropped this year into “moderate” enforcement. Seven other countries whose enforcement levels declined were Italy, Brazil, Spain, Sweden, Portugal, Denmark, and Lithuania.

Most of the 47 countries analyzed have limited or no enforcement at all, while representing 40 percent of global exports. These countries include China, the world’s top exporter, as well as Japan, South Korea, Hong Kong, Russia and more.

Only two countries—Latvia and Peru—stepped up their foreign bribery enforcement efforts. That now puts Latvia in the “moderate” enforcement category, while Peru has inched up into the “limited” enforcement category.

Inadequacies persist
Transparency International’s report further highlighted inadequacies in legal frameworks and enforcement systems. “Serious inadequacies persist in laws and justice systems in every country. In many, investigative bodies have inadequate resourcing and independence,” Transparency International said.

It continued, “Whistleblowers lack key protections. Few governments publish sufficient information on pending or concluded foreign bribery cases stymying accountability to citizens, partner countries and the people harmed.”

“Even in countries that do enforce, foreign bribery continues to be treated as a victimless crime,” said Gillian Dell, head of Conventions at Transparency International and co-author of the report. “This means states whose companies commit crimes abroad fill their treasuries with multimillion dollar penalties while victims are left to bear the cost.”

“It is time to recognize victims’ rights by developing transparent and accountable mechanisms to compensate those harmed, including foreign states, business competitors and whole populations suffering from foreign bribery,” Dell added. “This is essential to achieve justice and deter future violations.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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Among the $7 billion in laundered money, over $455 million was stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group sanctioned by the United States in 2019 in the largest known virtual currency heist to date (worth almost $620 million).

As a virtual currency mixer, Tornado Cash “operates on the Ethereum blockchain and indiscriminately facilitates anonymous transactions by obfuscating their origin, destination, and counterparties, with no attempt to determine their origin,” OFAC stated in its press release. “Tornado receives a variety of transactions and mixes them together before transmitting them to their individual recipients.”

“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson. “Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”

Tornado Cash has been added to OFAC’s Specially Designated Nationals (SDN) and Blocked Persons List, meaning all property and interests in property associated with Tornado Cash in the United States or in the possession or control of U.S. persons is blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.

“All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt,” OFAC stated.

Broader Industry Threat
“While most virtual currency activity is licit, it can be used for illicit activity, including sanctions evasion through mixers, peer-to-peer exchangers, darknet markets, and exchanges,” OFAC stated. “This includes the facilitation of heists, ransomware schemes, fraud, and other cybercrimes.”

According to the Treasury Department’s “2022 National Money Laundering Risk Assessment” report, criminals have increased their use of anonymity-enhancing technologies, including mixers, to help hide the movement or origin of funds.

OFAC’s action against Tornado Cash was taken pursuant to Executive Order 13694, as amended. The action follows OFAC’s first-ever sanctions, announced May 6, against a virtual currency mixer, Blender.io (Blender). In that case, Blender was used by the DPRK “to support its malicious cyber activities and money-laundering of stolen virtual currency,” including the processing of $20.5 million in illicit proceeds stolen by the Lazarus Group, according to OFAC.

OFAC’s enforcement activity targeting virtual currency mixers is being conducted in concert with other local and foreign enforcement agencies. For example, the Financial Crimes Enforcement Network (FinCEN) in October 2020 assessed a $60 million civil money penalty against the owner and operator of virtual currency mixer Helix for BSA violations—FinCEN’s first ever enforcement action against a bitcoin mixer.

Sanctions Compliance Takeaways
From a sanctions compliance standpoint, compliance officers in the virtual-currency industry play a critical role in complying with Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) and sanctions obligations to prevent sanctioned persons and other illicit actors from exploiting virtual currency to undermine U.S foreign policy and national security interests.

“As part of that effort, the industry should take a risk-based approach to assess the risk associated with different virtual currency services, implement measures to mitigate risks, and address the challenges anonymizing features can present to compliance with AML/CFT obligations,” OFAC stated.

As the Tornado Cash action and others like it demonstrates, OFAC stated, “mixers should, in general, be considered a high risk by virtual currency firms, which should only process transactions if they have appropriate controls in place to prevent mixers from being used to launder illicit proceeds.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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In a joint statement released on June 29, the multilateral taskforce stated it has also “seized, frozen, or detained yachts and other vessels owned, held, or controlled by sanctioned Russians—including the Amadea, the Tango, the Amore Vero, the Rahil, and the Phi.” Additionally, REPO has “seized or frozen luxury real estate owned, held, or controlled by sanctioned Russians.”

REPO credited its collaboration with the private sector in promoting effective sanctions implementation. “Financial institutions and other entities required to comply with both sanctions and anti-money laundering and countering the financing of terrorism regulations have helped to identify and immobilize assets subject to sanctions and worked to prevent Russia from evading sanctions,” the task force stated. “Where available, REPO members have relied on the use of registries—such as bank account and beneficial ownership registries.”

Multinational Task Force
The REPO Task Force, established in February, consists of Finance Ministry and Justice or Home Ministry in each of the following member jurisdictions: Australia, Canada, Germany, France, Italy, Japan, the United Kingdom, and the European Commission. It is also supported by the United States’ Financial Crimes Enforcement Network (FinCEN). It was launched following Russia’s unprovoked invasion of Ukraine begun on February 24.

As task force members, each participating country has committed to using their respective authorities in concert with other appropriate ministries to collect and share information to take concrete actions, including sanctions, asset freezing, civil and criminal asset seizure, and criminal prosecution.

“Where appropriate and possible, REPO members are undertaking efforts to update or expand and implement their respective legal frameworks that enable the freezing, seizure, forfeiture or disposal of assets, for example within criminal law,” the task force said in its latest joint statement.

Other nations are also cooperating with the sanctions on Russian oligarchs. Fiji, for example, helped seize the $300 million yacht of sanctioned Russian oligarch Suleiman Kerimov. Fijian law enforcement executed a seizure warrant freezing the Motor Yacht Amadea, a 348-foot luxury vessel owned by sanctioned Russian oligarch Kerimov. Fijian law enforcement, with the support and assistance of the FBI, acted pursuant to a mutual legal assistance request from the U.S. Department of Justice following issuance of a seizure warrant from the U.S. District Court for the District of Columbia, which found that the Amadea is subject to forfeiture based on probable cause of violations of U.S. law, including the International Emergency Economic Powers Act (IEEPA), money laundering and conspiracy.

Ongoing Efforts
“In the coming months, REPO members will continue to track Russian sanctioned assets and prevent sanctioned Russians from undermining the measures that REPO members have jointly imposed,” the joint statement continued. “Together, we will ensure that our sanctions continue to impose costs on Russia for its unprovoked and continuing aggression in Ukraine and to prevent funds and economic resources from being provided to or for the benefit of designated persons.”

“As we undertake this work, we are seeking to maximize the impact of sanctions on designated persons and entities, while guarding against spillover that affects global commodities markets and food supplies, which Russia has disrupted by choosing and continuing to wage war.”

In March, FinCEN issued an alert to financial institutions on the importance of identifying and quickly reporting suspicious transactions involving real estate, luxury goods, and other high-value assets of sanctioned Russian elites and their proxies. The Alert provides select red flags to assist financial institutions in identifying suspicious transactions, and reminds financial institutions of their Bank Secrecy Act reporting obligations. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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