An investigation into digital asset exchanges in the Russian capital has established that some exchanges are prepared to purchase digital coins and deliver the bills in the UK. Transparency International Russia found in its report that the transfer of funds usually does not require verification of the customer’s identity.
Russia-based cryptocurrency exchange exchanges stable coins for cash in the UK
Russian crypto exchanges that can transfer money abroad without following know-your-customer (KYC) procedures or anti-money laundering (AML) are the focus of a survey conducted by Transparency International’s Russian branch. The results are presented in a new report released Wednesday.
Our researchers were able to identify more than 20 coin trading platforms operating in the Moscow International Business Center (aka Moscow City). Through conversations with operators, we learned that eight of them were ready to exchange stablecoins pegged to the U.S. dollar into British pounds and deliver cash to recipients in London.
One of them, the authors note, is Suex, a crypto broker blacklistedby the US Treasury Department’s Office of Foreign Assets Control (OFAC) in September 2021 for facilitating ransomware-related transactions. They add that a platform called Pridechange was also transferring large amounts of money to Garantex, another blacklisted exchange with offices in the city of Moscow.
The method of remittance was similar in all cases. First, the customer would need to transfer an amount in tether (USDT) to a wallet address provided by the exchange. Once the payment was confirmed, the operator would send a courier, usually Russian-speaking, to a designated location in London to deliver the fiat cash the same or next day.
UK anti-money laundering regulations require cryptocurrency exchanges to register and conduct customer due diligence checks. None of the Russian platforms sought to verify the identity of Transparency’s undercover agents, even though the amounts exceeded 10,000 British pounds ($12,000).
In correspondence with the crypto exchanges, the organization obtained the crypto addresses used for these transfers. Transaction history indicates that the average monthly amount passing through such wallets is between $420,000 and $470,000. This estimate was based solely onUSDTtransaction volume; another stablecoin, USD Coin (USDC), was also used.
“The results of our study suggest that at least some shadow OTC crypto exchanges operate in the UK and are ready to offer cash without performing the required KYC procedures … While the full scale of this activity may be unknown, it is clearly not insubstantial and deserves closer scrutiny,” an excerpt from the report concludes.
Image credit:: Shutterstock, Pixabay, Wiki Commons