SWIFT Tightens Crypto Monitoring to Counter Russia, China Sanctions Evasion

SWIFT, the global financial messaging network, is intensifying its efforts to monitor cryptocurrency transactions to counter attempts by Russia and China to evade Western sanctions. As geopolitical tensions rise, these countries have increasingly turned to digital currencies to facilitate their trade and financial operations, prompting SWIFT to tighten its controls. The U.S. Treasury Department has also taken action to counter these evasion tactics, signaling a broader crackdown on illicit crypto activities.

SWIFT, which facilitates international financial transfers, has introduced new measures to help banks identify cryptocurrency transactions related to sanctions evasion. The system is being equipped to detect suspicious behavior involving digital assets, particularly from Russia and China, which have used cryptocurrencies to bypass regulations imposed by Western governments. This initiative comes as SWIFT plans to test live digital asset transactions in 2025, aiming to integrate traditional finance with the growing crypto ecosystem while maintaining the security of its network against threats from decentralized currencies.

An official familiar with the matter stated, “The financial system needs to begin to adjust to the reality of digital currencies being used to undermine sanctions.” This statement underscores SWIFT’s commitment to maintaining compliance in the face of evolving financial technologies. SWIFT’s efforts align with global concerns over the misuse of cryptocurrencies, as highlighted by the Financial Action Task Force (FATF), which has long emphasized the need for strong anti-money laundering (AML) and counter-terrorism financing (CTF) measures in the crypto space.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has also increased scrutiny on entities using cryptocurrencies to evade sanctions. Recently, OFAC imposed sanctions on individuals and entities in Russia, North Korea, and Venezuela for crypto-related irregularities. These measures aim to disrupt networks that facilitate illicit money movements, particularly those supporting Russia’s oil trade with China and India. A Treasury spokesperson stated, “We are determined to close loopholes that enable sanctioned entities to access global markets through digital assets,” demonstrating the U.S. government’s resolve to curb the growing trend of cryptocurrency evasion of sanctions.

Last year, OFAC targeted a group of firms in China for allegedly assisting Russia in circumventing Western sanctions. The Treasury’s warning of potential fines to smaller Chinese institutions suggested a broader effort to prevent crypto-related crimes. This has increased scrutiny of cross-border crypto transactions, especially in Asia. The use of cryptocurrencies by Russia in selling oil to China and India has been a particular concern, with transactions reportedly running in the tens of millions of dollars every month. Although traditional currencies still dominate Russia’s oil trade, the shift towards crypto highlights the challenges facing global financial regulators.

SWIFT’s upcoming trials of digital asset transactions in 2025 will be a critical test of its ability to balance innovation and security. In the wake of Russia and China’s attempts to use cryptocurrencies to circumvent sanctions, the global financial system is under increasing pressure to adapt. SWIFT’s enhanced oversight and the U.S. Treasury’s actions reflect a growing recognition of the need to address the risks posed by digital currencies in the context of international sanctions and financial stability.