Crypto is just one channel: how Russia launders corrupt wealth past sanctions

Cryptocurrencies divide opinion. To some, they represent innovation, decentralisation and a new way to invest; to others, they mean speculation, scams and fraud. Virtual assets – the broader regulatory term for cryptocurrencies – allow fast cross-border, peer-to-peer transfers without a bank or broker in between. That’s a real advantage where formal banking is costly, unreliable or simply out of reach. But the same features also serve bad actors, expediting money laundering, sanctions evasion and corruption.

Few places have refined this playbook further than Russia, and that's not incidental. Sanctions evasion is how Russia's kleptocratic elite protects wealth built over decades of corruption now that the usual channels are closed.

Cut off from the international banking system after the full-scale invasion of Ukraine, Russia sharpened an already sophisticated financial infrastructure. Transparency International Russia has documented how Russian actors built a global network of hard-to-trace cryptocurrency payments to move money on behalf of sanctioned entities, enabling trade without accountability.

That scrutiny abroad has a mirror image at home. Transparency International Russia was founded in 1999, just months before Vladimir Putin was first elected president. We have spent the years since watching the space for anticorruption work close in around us.

In 2015, our chapter was added to Russia's register of foreign agents, a legal label that carried a certain stigma and imposed restrictions on our work. After February 2022, rising repression and military censorship made it impossible to operate, forcing our team to leave the country. A year later, Russia's Prosecutor General declared the entire Transparency International movement an "undesirable organisation", making any collaboration with us grounds for criminal prosecution.

Russia's economy has been the subject of hundreds of headlines since the full-scale invasion of Ukraine. But whatever the challenge, the kleptocratic government finds a way to turn it to its advantage. In 2024, Transparency International Russia identified some of the real beneficiaries of these evasion strategies connected to the war: a small elite whose fortunes were likely built through corruption and remain protected by proximity to the Kremlin.

In our most recent Corruption Perceptions Index, Russia scored 22 out of 100, among the lowest in the world and its worst score on record.

Sanctions evasion and criminal activities extend well beyond crypto and Russia's borders. Transparency International Russia traced how Russian companies used entities registered in British Overseas Territories – mostly the British Virgin Islands and Bermuda – to trade goods worth billions. These same territories turned up in a 2018 Transparency International UK report on high-level corruption and large-scale money laundering.

In Australia, long-standing weaknesses in anti-money laundering rules have made the country a target for Russia's dirty money.

Enforcement agencies are increasingly turning to multi-jurisdictional operations to dismantle this sanctions-evading infrastructure. In March 2025, the US Secret Service, Europol and authorities from Germany and Finland launched a coordinated operation against Garantex, a Moscow-based crypto exchange sanctioned for facilitating millions of dollars in illicit transactions.

The network proved harder to dismantle. It has been reported that Garantex reappeared under new names and continue to operate across the UAE, Brazil, Kyrgyzstan, Thailand, Georgia and Hong Kong.

Garantex offers a case study for a wider problem: enforcement can seize a virtual asset service provider and indict a handful of individuals, but such operations can easily relocate to wherever oversight is weakest.

It took several countries acting together to take down the first iteration of Garantex. Closing down its successors will require sustained coordination indefinitely – fragmented national responses won’t cut it.

The European Union has expanded its use of sanctions to target crypto-assets, crypto-service providers and other instruments linked to Russia’s war on Ukraine. The EU's 21st sanctions package, adopted 23 July 2026, introduced for the first time a dedicated ban on crypto-asset services in third countries. The European Commission framed the intent as “a strong deterrent to countries hosting platforms that help Russia evade EU sanctions”. The package also includes the highest number of listings since the war began, targeting over 100 banks and crypto operators.

These steps reflect a growing awareness within major financial centres and are necessary, even if responses are moving at different speeds and addressing different pieces of the problem. But this is a global challenge. Without coordination, the gaps between jurisdictions will keep the door open to virtual assets as a place to hide illicit wealth.

Crypto should not be viewed as a separate or isolated channel for sanctions evasion or illicit activity. Rather, it is one element of a broader cross-border financial ecosystem that enables the movement and concealment of illicit funds. As a result, effective regulation requires international coordination and must address the links between cryptocurrencies, traditional banking systems, trade networks, shell companies, and third-country jurisdictions. Regulation will only catch up once it treats crypto the way beneficiaries of illicit finance already do – as one borderless system.

Article written in collaboration with Transparency International EU.