FinCEN Alerts: Suspected Russian Oligarch Transactions Worth Billions Flagged in U.S. BSA Data

In the aftermath of Russia’s military invasion of Ukraine in late February 2022, the Financial Crimes Enforcement Network (FinCEN) reported a surge in suspicious transactions involving Russian oligarchs and elites. Here are the key findings:

FinCEN’s Findings

Between March 2022 and October 2022, FinCEN analyzed approximately 7,000 BSA reports with a connection to Russia, resulting in 454 reports detailing suspicious transactions linked to Russian oligarchs, high-ranking officials, and sanctioned individuals. These reports exposed tens of billions of dollars in suspicious activity.

Three alerts were published by FinCEN since the invasion:

1. FinCEN Advises Increased Vigilance for Potential Russian Sanctions Evasion Attempts (Alert FIN-2022-Alert001, 7 March 2022)

   • Concerns regarding possible attempts to evade international sanctions.

2. FinCEN Alert on Real Estate, Luxury Goods, and Other High Value Assets Involving Russian Elites, Oligarchs, and their Family Members (Alert FIN-2022-Alert002, 16 March 2022)

   • Illicit activities involving luxury goods, real estate, and other assets.

3. FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Urge Increased Vigilance for Potential Russian and Belarusian Export Control Evasion Attempts (Alert FIN-2022-Alert003, 28 June 2022)

   • Russian and Belarusian entities attempting to evade export controls.

Transactions and Red Flags

FinCEN’s reviews revealed the following activities:

• Beneficial Ownership Transfers: Russian oligarchs and elites transferred beneficial ownership of their companies, trusts, or accounts to family members or associates around the time of the invasion. For instance, one oligarch transferred ownership of several companies to business associates on the day of the invasion.
• Wire Transfers to Children: FinCEN noted several wire transfers to children studying in the United States, which funded large purchases, primarily of residential real estate and luxury items.
• Transfers to Foreign Jurisdictions: Many transactions originated from or benefited accounts, companies, or individuals in other countries and were not reflected in U.S. BSA reports.

Geographic Trends

Over 2,000 of the 3,315 subjects in fixed fields were located in Europe, with the United Kingdom and Switzerland being the top countries for oligarch-related transactions. Several Russian oligarchs purchased high-value goods or property in other countries to potentially shield or launder ill-gotten wealth from future sanctions.

For example:

• Switzerland: One oligarch spent unusually high amounts on credit card payments from his Switzerland-based account, which may have included luxury goods and jewelry ahead of the Russian invasion.
• United Arab Emirates (UAE): Another oligarch transferred over $2 million to a UAE-based real estate company for the purchase and sale of residential premises.

Although some of this activity is not necessarily illegal, financial institutions flagged several potential red flags, including the unknown source of funds and the possibility that the funds could be linked to corruption or sanctioned companies.

In conclusion, FinCEN’s analyses of BSA data and open sources revealed significant suspicious transactions involving Russian oligarchs and elites following Russia’s invasion of Ukraine. It’s crucial for financial institutions to remain vigilant and report any potential Russia-related suspicious activity. For more guidance on reporting, financial institutions are encouraged to refer to FinCEN’s advisories and guidance on suspicious activity reporting.