НАСТОЯЩИЙ МАТЕРИАЛ (ИНФОРМАЦИЯ) ПРОИЗВЕДЕН, РАСПРОСТРАНЕН И (ИЛИ) НАПРАВЛЕН ИНОСТРАННЫМ АГЕНТОМ АНО "ЦЕНТР "ТИ-Р"
Transparency International Russia presents the report of a study on crypto exchanges which operate in Moscow-City and сan transfer money abroad, especially to the UK, without the necessity to reveal the client’s identity.
In this study, Transparency International Russia counted more than 20 crypto exchanges that operate in the Moscow International Business Center (MIBC), also known as Moscow-City. We conducted a search for ads of crypto exchanges located in Moscow-City. Then, in a series of undercover interviews with operators of these exchanges, we established that 8 out of 21 crypto exchanges were ready to exchange USDT for pounds sterling (GBP) in cash in London. It is worth mentioning that one of these exchanges is Suex, sanctioned by OFAC on September 21, 2021 for its part in facilitating financial transactions for ransomware actors.
The process of transfer looks very similar from one crypto exchange to another. A client has to make an advance USDT payment to the given crypto wallet address, and after that payment is confirmed, the crypto exchange operator schedules a courier delivery to a specified location in London for the same day or the day after.
Interestingly, almost every crypto exchange ready to perform the transaction said their London couriers were Russian-speaking. This may indirectly indicate that people from Russia and ex-USSR countries could be involved in facilitating shadow OTC crypto exchanges in London.
According to the UK’s anti-money laundering rules, crypto exchanges have to be registered with an AML supervisor and must carry out customer due diligence checks. Those failing to register or carry out their obligations face the prospect of fines and even criminal prosecution. But in the course of the transactions, no crypto exchange ever asked for passport identification or in any other way demanded to check our identity, and in every instance we managed to negotiate an exchange of an amount of cash exceeding GBP 10,000 in London.
In the course of our communication with the crypto exchanges under the disguise of a client, Transparency International Russia got access to the addresses of crypto wallets which were used for these transactions. The access to the history of operations conducted via these wallets allowed us to estimate the average monthly amount of money passing through such addresses. It ranges from USD 420,000 to USD 470,000; however, this estimate considers only the turnover of USDT and omits the turnover of USDC, another popular stablecoin. Hence the monthly turnover of each crypto exchange is likely even bigger. In case of the wallet of Pridechange crypto exchange, up to 21% of outflow payments went to the wallets associated with Garantex Europe OU, another OFAC-sanctioned virtual currency exchange located in Moscow-City.
The results of our study suggest that at least a few shadow OTC crypto exchanges operate in the UK and are ready to provide cash without performing necessary KYC procedures. This contradicts current UK legislation, and can be ideal for representatives of organised crime structures wishing to transfer illegal money into the legitimate financial system. This presents a significant money laundering risk and is illustrative of how the financial system is open to exploitation by criminals and corrupt officials looking to launder their ill-gotten gains. The full scale of this activity may be unknown, but it is obviously not insubstantial and deserves closer scrutiny and policing as an emerging area of risk.
The study report in full, which also contains a list of crypto exchanges located in Moscow-City that were ready to perform the transactions, is available here.