The Financial Crimes Enforcement Network (FinCEN) last week published an analysis of financial trends involving Russian oligarchs and how U.S. financial institutions have aided in the identification of more than $30 billion worth of sanctioned Russians’ assets.
U.S. financial institutions are required to flag suspicious financial activity by filing Bank Secrecy Act (BSA) reports to the Treasury Department. Reports involving Russian dirty money have been investigated by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, led by the Treasury and Department of Justice.
Russia invaded Ukraine on Feb. 24. Between March and June, FinCEN issued three alerts to financial institutions urging them to report any attempt by wealthy Russians to shield their money from sanctions by hiding it in U.S. banks or converting it to virtual currency.
From March 1 through Oct. 31, more than 7,000 BSA reports were filed about suspicious transactions that showed a nexus to Russia, according to FinCEN’s analysis report. The transactions included some dating back to January 2005 through October 2022, FinCEN said.
Of the reports, 454 were analyzed as helping the REPO Task Force block, freeze, or seize more than $30 billion from sanctioned Russians, FinCEN stated in a Dec. 22 press release.
Most of the sanctioned transactions involved accounts, companies, or individuals based in Russia, followed by those in the United Kingdom, Switzerland, and elsewhere in Europe. Transactions involving the Middle East were next, with accounts in Cyprus, the United Arab Emirates (UAE), and Israel most frequently involved.
Less frequent were transactions involving the Caribbean, North America, and Asia.
The reports showed around the time Russia invaded Ukraine, several Russian oligarchs transferred beneficial ownership of their accounts, companies, and trusts to family members.
One oligarch transferred more than $1 million in February to an account owned by his child in the United States. Another transferred $2 million to a UAE-based real estate company in March, allegedly for the purchase and sale of homes.
Another oligarch linked to several shell companies moved his Cyprus-based company to a business associate on Feb. 24, according to FinCEN. The oligarch also transferred assets like aircrafts, art, and yachts, marking them as payments to his ex-wife and associates for upkeep of properties he owned. In March and April, he transferred beneficial ownership of several of his trusts and businesses to his children.
Some oligarchs tried to hide their liquid assets just prior to the invasion of Ukraine by purchasing art and other high-value goods.
About 78 percent of the 454 BSA reports were filed by U.S.-based depository institutions. Holding companies and financial technology companies largely comprised another 19 percent of the reports, according to FinCEN.
The agency’s alerts were cited in 284 of the reports analyzed, FinCEN noted.
“These targets tend to be extremely sophisticated at money laundering and illicit finance, and the U.S. government will continue to leverage BSA reporting to investigate and counter their illicit networks,” said FinCEN Acting Director Himamauli Das in the agency’s release.