The Department of the Treasury’s Office of Foreign Assets Control recently designated Russian national Ekaterina Zhdanova for allegedly laundering and conducting large cross border transactions for Russian elites using virtual currency. According to OFAC, Zhdanova provided services that enabled Russian oligarchs to access Western financial markets and engage in transactions that would have otherwise been blocked by expansive economic sanctions imposed in response to Russia’s illegal invasion of Ukraine in February 2022. Zhdanova allegedly utilized multiple methods of value transfer to move funds internationally, including the use of cash, traditional businesses, and entities that lack Anti-Money Laundering/Combatting the Financing of Terrorism (“AML/CFT”) controls such as Garantext Europe OU, a Russian cryptocurrency exchange that was designated by OFAC in 2022 pursuant to Executive Order 14024 for operating in Russia’s financial services sector. In 2021, Zhdanova also allegedly laundered more than $2.3 million in suspected victim payments for individuals connected with Ryuk, a Russian ransomware group.
Zhdanova was designated pursuant to Executive Order 14024 for operating or having operated in the Russia’s financial services sector. As a result of this designation, all property and interests in property of the designee within the United States or within the possession or control of a US person are blocked, and US persons are generally prohibited from engaging in transactions involving a designated person. In addition, entities owned 50 percent or more by one or more blocked persons are also blocked.