Tag: rosfinmonitoring

Russia Plans to Build AI Software to Remove the Anonymity of Users in Crypto Transactions

Russia’s financial crime agency has plans to develop its own software to track cryptocurrency transactions to the related users. 

Rosfinmonitoring, also known as the Federal Financial Monitoring Service in Russia was created by President Vladimir Putin to collect and analyze information about financial transactions. The agency aims to combat domestic and international money laundering, terrorist financing, and other financial crimes. 

The Russian agency’s plan involves using artificial intelligence (AI) for its software, as the agency sees an “urgent need to create effective opportunities for state control over the circulation of virtual assets.”

According to the RBC, the system will allow the monitoring and analysis of the movement of digital currencies, while identifying service providers. The system would also partially remove the anonymity of users involved in cryptocurrency transactions, including those involving Bitcoin (BTC), Ethereum (ETH), Omni, Dash and Monero (XMR).

Plans to create an AI that will monitor the entire internet

The software would also allow the investigation into the illegal circulation of cryptocurrencies and the detection of images related to crypto-related terrorist financing and money laundering.

The Russian agency is planning to create an AI that would be able to monitor the entire internet in search of illegal actions related to digital assets, said Nikita Kulikov, a member of the State Duma Expert Council. Dmitry Goroshevsky, the CTO of TON Labs explained that the information on an account that has been created on a site on the darknet can be traced to a digital wallet:

“Next, if you want to open an account on some legitimate crypto exchange, and then withdraw funds to an account associated with transactions with an account from the darknet, then this is a reason for the exchange security officer to pay attention to your account.”

Russia still believes cryptos are not legitimate

Despite the Digital Financial Assets (DFA) bill being passed by the State Duma, Russia’s Central Bank has nevertheless argued that crypto transactions are not deemed as legitimate investments.

Russia passed its first major legislation regarding cryptocurrencies in summer 2020. However, the country’s central bank still continues to treat the crypto industry as a criminal field and thinks it facilitates illegal dark transactions.

The deputy governor of Russia’s central bank thinks that cryptocurrency use is subject to criminal liability, backing his point by mentioning Bitcoins. The official justified his stance by stating that Bitcoins are often used in illicit activities, such as money laundering, and is therefore the reason why the Bank of Russia will not support these cryptocurrencies. 

Binance Denies Sharing Users Data with Russian Intelligence Agencies

Binance exchange has responded to allegations by Reuters that its Russian subsidiary has close ties to the country’s financial regulator called Rosfinmonitoring.

In the Reuters report, it was alleged that Binance shared its user data with Rosfinmonitoring in a bid to track down donations made to the opposition leader, Alexei Navalny.

Binance categorically called the Reuters report a “false narrative” and provided a context in which its relationship with Rosfin was no different from those it had with other regulators in other countries. 

Binance said the allegations that it shares user’s data with the law enforcement agencies are misconstrued and that as a business operating in Russia, it is obligated to respond to any request from a regulator requiring it to provide any information regarding its operations, provided it is within the confines of the law.

With Binance disagreeing with the Reuters publication, the exchange said it would be filing an official complaint based on the media platform’s own editorial code.

“Reuters, one of the most esteemed and trusted news agencies, published this article that completely contradicts the reputation this outlet has built over the years and is not representative of our experience working with countless other journalists in their organisation, ” the exchange wrote. To this end, we will be writing a formal complaint to Reuters under their own editorial code..”

Binance unequivocally stated that it is not assisting the Russian government in its effort to crack down on Alexei Navalny and that it is the only exchange to have implemented the latest sanctions levied on Russia by the European Union Council with the newly introduced restrictions as reported by Blockchain.News.

In its bid to foster transparency, Binance published the email trail of conversations between its head of Eastern Europe and Russia, Gleb Kostarev, and the Reuters journalists detailing the exchange of information that led to the allegation publication. 

Binance is always in the cross-hairs with media firms. Back in October 2020, Forbes published an allegation that Binance.US was established in order to distract regulators in a bid to evade its tax obligations. The exchange came out to deny the report as well.

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