On August 20, the UK government announced a crackdown on Russia’s attempts to avoid western sanctions by exploiting Kyrgyzstan’s financial systems and crypto networks.
According to the UK government, “with sanctions continuing to bite, Russia has turned to the Kyrgyz financial sector to channel money through opaque financial networks, including through the use of cryptocurrencies. These networks have created a convoluted scheme to evade sanctions imposed by the UK and its partners” on Russia over its invasion of Ukraine.
The UK sanctions target the Kyrgyzstan-based Capital Bank, and its director Kantemir Chalbayev, “which Russia uses to pay for military goods”. Sanctions also hit the Grinex and Meer cryptocurrency exchanges, the infrastructure behind a new rouble-backed cryptocurrency token A7A5, which has moved $9.3bn on a dedicated crypto exchange in just four months and is specifically designed as an attempt to evade western sanctions, the UK government said, adding that “keeping up the pressure on Russia’s war machine is vital to reinforcing U.S. President Trump’s efforts to stop the killing in Ukraine and force Russian President Putin to engage in meaningful talks”.
UK Sanctions Minister, Stephen Doughty said: “If the Kremlin thinks they can hide their desperate attempts to soften the blow of our sanctions by laundering transactions through dodgy crypto networks – they are sorely mistaken. These sanctions keep up the pressure on Putin at a critical time and crack down on the illicit networks being used to funnel money into his war chest.”
Capital Bank has officially denied any involvement in sanctions circumvention practices.
