The United States has implemented expansive sanctions and other imposed restrictions in connection with the Russian Federation’s invasion of Ukraine. In committed support of Ukraine, the United States, along with allies and partners in Europe and around the globe, has imposed economic pressure on Russia and Belarus. In recent weeks, sanctions on oligarchs, politicians and related persons; restrictions on imports; and blocking of assets continue to take form as the invasion persists. As financial institutions, we are reminded to remain attentive to any sanction evasion efforts and of Bank Secrecy Act reporting obligations. Continue to consult the Office of Foreign Assets and Control’s (OFAC’s) website for detailed information on sanction actions.

The Financial Crimes Enforcement Network (FinCEN) has issued two recent alerts on potential Russian sanction evasion attempts. Items of value, such as real estate, luxury goods, and other high-value assets, can be used as a medium for exchange or investments to evade sanctions or imposed restrictions used by corrupt foreign “politically exposed persons” (PEPs) or their proxies. Evasion activities could be performed by a variety of actors, not limited to PEPs, and through non-sanctioned Russian and Belarusian financial institutions and third countries.

Red flags to look for

There are several red flags credit union staff should be looking for to identify potential evasion attempts. (For the complete list, please refer to FinCEN alert FIN-2022-Alert001 and FIN-2022-Alert002 and advisory FIN-2008-A003.)

  • Use of corporate vehicles (i.e., legal entities, such as shell companies, and legal arrangements) to obscure ownership, source of funds, or countries involved, particularly sanctioned jurisdictions.
  • Use of shell companies to conduct international wire transfers, often involving financial institutions in jurisdictions distinct from company registration.
  • Use of third parties to shield the identity of sanctioned persons and/or PEPs seeking to hide the origin or ownership of funds (For example, to hide the purchase or sale of real estate).

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Defining “items of value”

As your credit union looks for the red flags, it will be helpful to keep in mind the following explanations of several items of value that can be used as a medium for exchange or investments to evade sanctions or imposed restrictions.

Real estate

  • The purchase, sale, donation, or legal ownership transfer of high-value real estate in the name of a foreign legal entity, shell company, or trust, especially if the transaction is far above or below fair market value, involves all-cash transfers, or is funded by a third party with a known nexus to sanctioned Russian elites and their proxies.
  • The use of legal entities or arrangements that may have a nexus to sanctioned Russian elites and their proxies to hide the ultimate beneficiary or the origins or source of the funds. The maintenance, purchase, or termination of real estate insurance by persons with a known nexus to sanctioned Russian elites and their proxies.


  • The use of shell companies and trusts, and/or third-party intermediaries, including art dealers, brokers, advisers, or interior designers, with a nexus to sanctioned Russian elites and their proxies, to purchase, hold, or sell art on a client’s behalf.
  • Artwork-related transactions involving persons with suspected ties to sanctioned Russian elites and their proxies who are not concerned with recouping their initial investment or paying a substantially higher price than the notational value of the work, and/or conduct transactions that exceed the expected sales value of the work.
  • The purchase, maintenance, or termination of insurance policies to protect the market value or provide cash payments for the loss, theft, or destruction of privately held or donated high-value artwork linked to sanctioned Russian elites and their proxies.

Precious metals, stones, and jewelry

  • Transactions involving PMSJ trading companies, particularly in Asia, and firms with a nexus to sanctioned Russian elites and their proxies.
  • High-value or frequent transactions involving mining operations with opaque and complex corporate structures that are or have been owned or controlled by sanctioned Russian elites or their proxies.

Other high-value assets

  • The involvement of a common set of financial institutions, individuals, or addresses to facilitate luxury goods-related transactions that may have a nexus to sanctioned Russian elites and their proxies.
  • The involvement of law firms based in global and offshore financial centers that have historically specialized in Russian clientele or in transactions associated with sanctioned Russian elites and their proxies.
  • The involvement of legal entities, such as shell companies, with a nexus to sanctioned Russian elites and their proxies, that are falsely posing as well-known entities and operating in jurisdictions other than the well-known entity’s jurisdiction and geographic sphere of business.

Taking action

If your credit union identifies any potential evasion attempts, you are reminded to:

  • File a Suspicious Activity Report (SAR). Identify and quickly report any suspicious activity. For SAR filing instructions pertaining to Russian and Belarusian sanctions, additional guidance is available in FinCEN alert FIN-2022-Alert001 and FIN-2022-Alert002.
  • Conduct due diligence. Conduct appropriate, risk-based, customer due diligence and enhanced due diligence where required.
  • Participate with -information sharing. Share information consistent with section 314(b) of the USA PATRIOT Act. Information sharing among financial institutions is critical to identifying, reporting, and preventing evolving sanctions evasion, Russian-related ransomware and cybercrime actives, and laundering of the proceeds of corruption.

Kinya Knight, AVP
BSA/AML Compliance Manager