Central Bank of Russia 2022. Financial Pyramid Schemes and Cryptocurrency Scams. Money-Laundering Services to Crypto Fraudsters Uncovered.

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A majority of the financial pyramids identified in 2022 used cryptocurrencies in one way or another, Russia’s central bank announced in a new report. Amid Western sanctions, Russian scams have stepped up their activities, often claiming to be licensed by foreign authorities to offer access to crypto assets.

Russia has plans to issue its own digital rouble. Still, the government has only recently come round to supporting private cryptocurrencies, having argued for years that they could be used in money laundering or to finance terrorism. Now it seems that it is indeed happening.

Russian Pyramids Take Advantage of Western Sanctions and Popularity of Crypto

Over 56% of the pyramid schemes in the Russian Federation during the first half of the year, or 537 entities, raised funds in various cryptocurrencies or advertised crypto investments, a report devoted to countering illegal activities in the country’s financial market reveals. The Central Bank of Russia (CBR) has published the paper.

Quoted by RBC Crypto, the regulator remarked that the sanctions imposed by the West over the conflict in Ukraine have dramatically changed the working conditions for legal and financial institutions in Russia, and fraudsters benefitted from the situation.

Russians were looking for alternative ways to invest, and the response to this demand came from new financial pyramids. The monetary authority explained that these were small-scale schemes with a short lifespan.

Between January and June 2022, the central bank identified a staggering number of these scams — more than 2,200 companies, projects, and individual entrepreneurs whose operations showed signs of illegal financial activity. The report notes that the number is three times higher than the figure from the same period in 2021.

Crypto is not the only area such entities have been interested in, as 671 of them targeted the securities market. According to the CBR, these companies often pretend to be authorized by a regulatory body in a different jurisdiction and collect money exclusively in foreign fiat or cryptocurrency.

The Bank of Russia has notified the relevant law enforcement agencies, the Federal Tax Service, the Roskomnadzor telecom watchdog, and domain name registrars to curb their activities. The CBR also takes regular steps to block suspicious websites and maintains a blacklist of entities that are likely to be illegally operating in the country’s financial sector.

The Central Bank of Russia already registered an increase in new financial pyramids exploiting the crypto theme in May. Another reason for their growth was the financial uncertainty that boosted interest in schemes around investment opportunities in the digital asset space.

Meanwhile, the Russian Ministry of Internal Affairs suggested this week that the authorities in Moscow should introduce criminal liability for those providing money-laundering services to crypto fraudsters. These so-called ‘droppers,’ sometimes unsuspecting individuals who allowed scammers to use their bank accounts and crypto wallets, can get up to seven years of prison for their involvement if lawmakers accept the ministry’s advice.

Source: Bitcoin.com


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