Hannah Lang and Andrea Shalal

WASHINGTON, (Reuters) – U.S. officials noticed an increase in illicit financial transactions since Russia invaded Ukraine. However, the volume of these transactions is not large enough to help Moscow evade sweeping Sanctions, a top Treasury official stated on Friday.

Nellie Liang (Treasury undersecretary for domestic finances), stated that current digital assets are not sufficient to support an economy and that it is difficult for people to evade sanctions by using these assets.

Liang said that the transaction sizes we have seen are small. Although we don’t always see everything, there are some areas that we can monitor. It’s not clear that this could be used on a massive scale to avoid sanctions.

Liang indicated that Treasury had been looking into the matter for many years. Liang also stated that Group of Seven countries and others have raised concerns over the potential use of digital asset for illegal finance. This makes effective enforcement essential.

It is becoming more common for people to be aware and take notice of this, she stated. It’s increasing because crypto is used more often, but its use as an illicit financial medium is still not as significant as using cash.

Janet Yellen (U.S. Treasury Secretary) earlier this month pledged to fix potential gaps in severe sanctions imposed upon Russia in response to its invasion of Ukraine on February 24, and stated that there were anti money laundering laws in place to prohibit members of Russia’s elite using cryptocurrencies to evade the measures.

Russia describes its military operations in Ukraine as “special military operations” and says it is not intended to seize territory. Its purpose is to degrade the capabilities of neighboring military forces.

Although the Biden administration repeatedly assured that cryptocurrency could not be used on a large-scale to aid Russia in circumventing sanctions, Senator Elizabeth Warren and other Democratic legislators expressed concerns that Russian oligarchs might turn to digital assets platforms after being shut out from traditional finance.

Along with 10 Democratic senators, Warren introduced Thursday a bill that would allow the president to sanction foreign crypto firms doing business in sanctioned Russian entities, and prohibit them from transacting directly with U.S. clients.

Liang will be leading Treasury’s efforts to implement the President Joe Biden executive order regarding cryptocurrencies.

The executive order directs the Treasury, the Justice Department and other agencies study the economic and legal ramifications for creating U.S. central banking digital currency. It also authorizes them to author reports about the potential role of cryptocurrencies in evolving payments ecosystem.