Press release 31st Oct 2023

New investigation highlights major Russian dirty money risk at crypto payment providers

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Research by Transparency International Russia in Exile (TI-R) exposes how intermediaries on the dark web are selling ‘money mule’ accounts at crypto-to-fiat payment providers to Russian speakers.

In Anonymity for Sale: The Thriving Black Market of Crypto-to-Fiat Mules, investigators found several intermediaries were offering the use of mules - providing opportunities for criminals and kleptocrats the ability to move money from anonymous crypto wallets into fiat currency, in the name of a nominee from another country.

The ability for those seeking to move funds through the financial system anonymously poses a significant security and money laundering risk.

The scale of known activity suggests hundreds, and perhaps even thousands, of these anonymous accounts are being sold every month.

TI-R researchers contacted eight intermediaries offering accounts at a UK-registered company Wirex, which would be held in the name of a nominee. Prices ranged from $30 to $220 depending on the location of the nominee account holder, which included Bulgaria, Latvia, Estonia, Poland, Czech Republic and Spain. Some of the nominees offered were Ukrainian refugees living in Western Europe. Those buying these accounts would receive proof of the nominee’s identity, alongside their contact details in case Wirex blocked the account.

The report recommends Wirex and other crypto-to-fiat service providers include the following signs as red flags in their financial monitoring processes, which should help identify and report potential money mules accounts:

  • a long absence of any operations after account registration by an individual, and then a sudden change of password and contact phone number right before the account starts to perform transactions

  • a change of password and contact phone number right after account registration

  • accounts registered to refugees or individuals of one country with transactions taking place in a completely different jurisdiction

  • any clients with an identifiable connection to those selling money mule accounts on the dark web

Ilia Shumanov, ED at Transparency International Russia in Exile said:

"Solving the problem of disclosing anonymous owners of commercial companies has led to the fact that anonymity has spread over electronic payments and crypto operations. We see that there is a whole industry of nominee account sellers of UK/EU electronic payment systems that have been beyond the supervision of regulators for years. This leads to uncontrolled access to the UK/EU financial system, which carries significant risks of money laundering and terrorist financing. Monitoring the implementation of FATF recommendation 16, which defines the obligation of a financial institution to obtain information not only about the originator of the payment, but also about its beneficiary, should become a priority for UK/EU regulators."

Rachel Davies, Advocacy Director at Transparency International UK said:

"The anonymity of cryptocurrencies combined with money mule accounts makes an ideal method for money laundering. Now that Russia’s isolated from the conventional banking system, we should expect a wide variety of innovation in skirting sanctions. The finance industry and its UK regulators should be alert to signs of alternative payment systems here providing a backdoor to criminals and kleptocrats."

Notes to editors

The full (English language) report is available here.

In March 2023, the Russian Prosecutor-General's office designated Transparency International an ‘undesirable organisation’. As a consequence TI Russia (TI-R), who had operated in the country since 1999, was forced to dissolve. Anyone who cooperates with TI in Russia faces the risk of criminal charges.

In October 2023, TI-R in Exile relaunched outside of the Russian Federation to continue its fight against corruption in Russia.

From 8 October 2023, cryptocurrency firms are banned from advertising to UK customers without registering with the Financial Conduct Authority (FCA) for supervision under anti-money laundering rules, or having their marketing authorised by an approved firm.