A Guide to Anti-Money Laundering for Crypto Firms

German Officials Raid UBS Offices Over Russian Oligarch Money Laundering Probe

Latest News

German officials have searched UBS bank branches in Munich and Frankfurt as part of a money laundering investigation into Russian oligarch Alisher Usmanov. On November 8, 2022, a spokesman for the Frankfurt prosecutor’s office said Usmanov is accused of arranging multiple transactions between 2017 and 2022 to conceal the origin of tens of millions of euros. 

The raids mark further investigative work into the allegations against Usmanov; his lakeside villa and motor yacht were searched by German police in September.

With a net worth of $14.6 billion, it is suspected that Usmanov’s transferred funds originated from criminal offenses, particularly tax evasion. An Usmanov spokesperson has rejected the allegations, describing them as false, unfounded, and defamatory. 

Oligarch Funds

Russian oligarchs have long favored Swiss bank accounts due to the country’s secrecy and stability laws. However, In February 2022, the government decided to adopt wholesale EU sanctions against Russia, with the State Secretariat for Economic Affairs (SECO) reporting $6.8 billion of Russian assets had been frozen by July.

In March, the Swiss Bankers Association (SBA) reported that approximately $200 billion of Russian wealth was currently being held in Swiss banks. In UBS’ annual report published around the same time, the bank said it had around $200 million of exposure to Russian assets, which were being used as collateral in loans. Additionally, the bank reported holding $10 million of loans outstanding to clients that had been hit by western sanctions imposed due to Russia’s invasion of Ukraine. 

Firms should note that Usmanov is currently on 11 sanctions lists, including:

Preventative Measures

In March, the European Commission launched the “Freeze and Seize” Task Force in partnership with the G7 to implement sanctions and seize the assets of listed Russian oligarchs. According to EU Commissioner for Financial Services, Financial Stability, and Capital Markets Union, Mairead McGuinness, the task force’s goal is to “guarantee the efficacy” of sanctions from Europe and the US – ensuring they have the maximum possible impact and show Russian elites that the West is serious about sanctions enforcement.

In July, the National Crime Agency (NCA) also established the Combatting Kleptocracy Cell (CKC), focusing on investigations into corrupt elites and politically exposed persons (PEPs) laundering their assets within the UK.

Most recently, in October, the US Treasury Department’s Office of Foreign Assets Control (OFAC) and the UK Treasury’s Office of Financial Sanctions Implementation (OFSI) announced an “enhanced partnership” with a focus on collaborating further on economic sanctions implementation and enforcement

Key Takeaways

To detect foreign sanctions targets using the financial system to evade anti-money laundering and combatting the financing of terrorism (AML/CFT) controls, firms should ensure they are screening their customers against relevant sanctions lists. Firms should also screen their customers to find out if they are politically exposed persons (PEPs) and adjust their compliance response accordingly. If a customer is a PEP, enhanced due diligence (EDD) measures should be exercised in addition to screening for negative news stories.

 

The Evolving Use of Sanctions

Take a look at the newest trends and updates from key sanction regimes around the world.

Download now

Originally published November 11, 2022, updated November 11, 2022

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2022 IVXS UK Limited (trading as ComplyAdvantage).