IRS and Chainalysis Team Up to Counter Crypto-Sanction Evasion by Russian Oligarchs

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The U.S. Internal Revenue Service (IRS) has joined forces with crypto investigations company Chainalysis to aid the Ukraine in targeting Russian oligarchs who may be utilizing cryptocurrency to evade sanctions. The partnership was announced on Thursday, with the IRS Criminal Investigation (IRS-CI) division providing blockchain analysis tools to support Ukrainian investigators.

As part of the collaboration, the IRS donated licenses for Chainalysis software to Ukraine, and approximately 50 Ukrainian law enforcement officers have completed virtual training. In-person training sessions are slated to take place in the future. IRS-CI Chief Jim Lee noted that these trainings are designed to help participants sharpen their digital investigative skills and trace the sources of blockchain funds using cryptocurrency forensic tools.

By sharing these tools, Lee believes it not only safeguards the U.S. financial system but also contributes to the security of the global economy. Although evidence suggests that cryptocurrency is playing a relatively minor role in Russia’s invasion of Ukraine, U.S. lawmakers remain concerned that Russian oligarchs could exploit digital currencies to bypass U.S. and European economic sanctions.

Ukrainian authorities echo this sentiment. Police Colonel Yurii Vykhodets of the Cyber Police Department of the National Police of Ukraine said they often witness fundraising activities conducted via cryptocurrency, as Russia seemingly believes that virtual assets can be utilized to circumvent sanctions. Vykhodets credited the training as both timely and beneficial for enhancing the effectiveness of Ukraine’s Cyber Police in this specific area.

The IRS-CI is responsible for investigating financial crimes, such as tax fraud. Recently, the IRS filed claims amounting to nearly $44 billion against the estate of bankrupt crypto exchange FTX and its affiliated entities. In addition, the U.S. Department of Justice is looking into allegations that Binance permitted Russian customers to access the exchange despite U.S. sanctions related to Russia’s invasion of Ukraine.

Currently, the IRS-CI has 23 ongoing investigations related to sanctions. While the outcome of these investigations remains uncertain, the collaboration with Chainalysis in assisting Ukraine demonstrates the expanding role of blockchain analysis and digital forensics in the ongoing geopolitical situation. This further highlights the importance of understanding the potentials and limitations of cryptocurrency as the global community continues to monitor and adapt to these rapidly changing circumstances.

Source: Coindesk

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