The U.S. Internal Revenue Service and crypto investigations firm Chainalysis are collaborating with Ukraine to identify Russian oligarchs who may be using cryptocurrencies to evade sanctions amid the ongoing conflict.

According to a Thursday announcement, the U.S. Internal Revenue Service (IRS) and Chainalysis have joined forces with Ukraine to target Russian oligarchs who may be using cryptocurrencies to evade sanctions.

IRS-CI Provides Ukraine with Blockchain Analysis Tools

The IRS Criminal Investigation (IRS-CI) division provides Ukrainian investigators with tools for analyzing blockchain data. The IRS donated licenses from Chainalysis to Ukraine.

Approximately 50 Ukrainian law enforcement officers participated in virtual training, with additional in-person training to come.

IRS-CI Chief Jim Lee stated in the announcement, “These trainings help participants hone their digital investigative skills to trace the source of blockchain funds and unmask cryptocurrency transactions with cryptocurrency forensic tools.” “Sharing tools not only safeguard the U.S. financial system but the global economy.”

Crypto Sanctions Evasion by Russia is a Growing Concern

Since Russia’s Ukraine invasion, the countries have used cryptocurrencies to fuel war efforts, evade sanctions and fund humanitarian efforts. Evidence indicates that crypto isn’t significant in Russia’s war effort.

Still, U.S. legislators remain concerned that Russian oligarchs could use crypto to circumvent U.S. and European economic sanctions.

“We often see fundraising campaigns conducted with the use of cryptocurrency, as Russia believes in the possibility of circumventing sanctions by using virtual assets. The training is timely and provides a strong impetus for more effective work by the Cyber Police in this area.”

Yurii Vykhodets, police colonel of the Cyber Police Department of the National Police of Ukraine.

Sanctions Evasion in Focus of IRS-CI Cases

IRS-CI is responsible for investigating financial crimes, such as tax fraud. The IRS recently filed claims against the estate of dissolved crypto exchange FTX and its affiliated entities totaling nearly $44 billion.

In addition, the U.S. Department of Justice is investigating whether Binance permitted Russian consumers to access the exchange in violation of U.S. sanctions related to the Russian invasion of Ukraine.

Currently, IRS-CI has 23 ongoing investigations related to sanctions.