The U.S. Department of the Treasury, along with its Office of Foreign Assets Control (OFAC), recently imposed sanctions on a Russian businesswoman named Ekaterina Zhdanova. These sanctions were put in place due to her involvement in facilitating money laundering and fund movement for Russian elites using various methods, including virtual currency. Zhdanova utilized virtual currency to conduct significant cross-border transactions, such as transferring over $100 million to the United Arab Emirates at the request of a Russian oligarch. Additionally, she played a role in establishing a tax residency service for Russian clients in the United Arab Emirates, which involved payments made in both cash and virtual currency.
The U.S. Treasury also discovered that Zhdanova was responsible for laundering $2.3 million for an affiliate of the Russian ransomware group Ryuk, notorious for conducting transactions through cryptocurrency. It is believed that these funds originated from payments made by victims of ransomware attacks. Zhdanova was found to rely on services that lack adequate anti-money laundering and counter financing of terrorism (AML/CFT) controls, particularly the Russian crypto exchange called Garantex, which itself has been designated in 2022.
In addition to virtual currency, Zhdanova is suspected of utilizing traditional methods of money laundering, such as cash transactions, connections with other money launderers, and even her involvement with a luxury watch company. In a specific instance in March 2022, she assisted a Russian client in concealing and transferring over $2.3 million to Western Europe. This was achieved through the fraudulent opening of an investment account and real estate purchases.
The sanctions imposed by the U.S. Treasury on Ekaterina Zhdanova effectively restrict most transactions between her and financial institutions or individuals. Furthermore, the transfer of any of her assets held by a U.S. entity is also blocked, with the requirement of reporting such assets to OFAC. While the scope of the sanctions covers a range of funds and property, a particular focus is placed on three Bitcoin addresses belonging to Zhdanova, all of which are now under restriction.
These sanctions on Zhdanova are part of a broader set of actions taken by OFAC against entities connected to Russia. Many of these sanctions followed the country’s invasion of Ukraine in 2022. Notable examples include the targeting of the Russian mining firm Bitriver and members of a Dubai-based company called Huriya Private. Chainalysis, a renowned cryptocurrency analytics firm, keeps an updated list of other recent sanctions imposed by OFAC.
The U.S. Treasury’s sanctions on Ekaterina Zhdanova serve as a critical step in combating money laundering activities involving virtual currency and other methods. By targeting individuals like Zhdanova, who facilitate illicit financial activities for Russian elites, the Treasury aims to disrupt the flow of illicit funds and hold those responsible accountable. These actions demonstrate the Treasury’s commitment to strengthening national and international efforts to combat money laundering and protect the integrity of financial systems.