Cryptocurrency companies have begun self-reporting suspected breaches of sanctions against Russia to the UK government, according to data compiled by a law firm, following a $4.3 billion fine meted out at the end of last year.
Three out of 50 self-reports originating from crypto firms in the past two years, multinational law firm Pinsent Masons found, with other financial services companies responsible for most reports of suspected sanctions breaches.
Between February 2023 to and the end of 2024, there were 38 financial services firms that reported breaches by sanctioned individuals.
The current sanctions list currently contains details on a number of crypto wallets, the law firm said.
As crypto wallets allow direct and anonymous person-to-person transactions outside of the banking system, the law firm said as the ultimate beneficial owner can be difficult to ascertain.
"It is widely known that crypto currencies are being used to evade sanctions," said Hinesh Shah, partner and forensic accountant at Pinsent Masons.
"It is good to see that some UK based crypto firms are taking the problem seriously. Crypto firms operating in stricter regulatory and legal frameworks are much more likely to take their obligations seriously.”
Crypto firms that are registered with the FCA are likely to have more stringent anti money laundering (AML) and know your customer (KYC) processes.
Hinesh adds: "Regulators have a history of fining aggressively when it comes to fines for breaches of AML or KYC, meaning UK based crypto firms need to take this seriously."
The Binance cryptocurrency exchange was fined $4.3 billion in the US in November for failing to take measures against money laundering and breaches of international sanctions.
At the time, a top official at the US Commodity Futures Trading Commission said the penalty was set at a high level to act as a deterrent to other groups, with the hope it would bring more "order and structure" to the crypto industry.