An investigation into digital asset exchanges in the Russian capital has established that some of them are ready to buy digital coins and deliver paper money in the U.K. The transfer of funds does not usually involve the identification of the clients, Transparency International Russia reveals in a report.
Russia-based Cryptocurrency Exchanges Swap Stablecoins for British Cash
Russian crypto exchanges that can transfer money abroad without following know-your-customer (KYC) procedures and anti-money laundering (AML) are in the focus of a study conducted by the Russian Chapter of Transparency International. The results were presented in a new report published on Wednesday.
The association’s researchers were able to identify more than 20 coin trading platforms operating from Moscow International Business Center, commonly referred to as Moscow City. Through conversations with operators, they also found that eight of them were ready to exchange U.S. dollar-pegged stablecoins for British pounds and hand over the cash to recipients in London.
The authors noted that one of them is Suex, a crypto broker blacklisted by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) in September, 2021 for facilitating ransomware-linked transactions. They also add that a platform called Pridechange sent significant amounts of money to Garantex, another blacklisted exchange with offices in Moscow City.
The way the transfers were made was similar in all cases. First, a customer needs to send the amount in tether (USDT) to a wallet address provided by the exchange. Once the payment is confirmed, the operator would dispatch a courier, usually a Russian speaker, to a specified location in London to deliver the fiat cash on the same or the following day.
U.K. anti-money laundering regulations require cryptocurrency exchanges to be registered and carry out customer due diligence checks. None of the Russian platforms ever asked to verify the identity of Transparency’s undercover representatives, despite the amounts of money exceeding 10,000 British pounds ($12,000).
During its communication with the crypto exchanges, the organization obtained the crypto addresses used for these transfers. The transaction history shows that the average monthly amount of money passing through such wallets ranges between $420,000 and $470,000. The estimate is based only on the USDT turnover while usd coin (USDC), another stablecoin, was also used.
“The results of our study suggest that at least a few shadow OTC crypto exchanges operate in the U.K. and are ready to provide cash without performing necessary KYC procedures… The full scale of this activity may be unknown, but it is obviously not insubstantial and deserves closer scrutiny,” an excerpt of the report concludes.
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