FinCEN special measure prohibiting transmittal of funds involving PM2BTC (Russian illicit-finance virtual-currency exchange)

Mechanism

The order invokes FinCEN's special-measure authority under 31 U.S.C. 5323 (Section 9714(a) of the Combating Russian Money Laundering Act, as amended by Section 6106 of the FY 2022 NDAA). It is the first time this Russia- specific special-measure authority has been used; prior similar prohibitions have run under Section 311 of the USA PATRIOT Act (31 U.S.C. 5318A) but are not available against virtual-currency exchanges identified specifically in connection with Russian illicit finance.

The substantive prohibition: a US "covered financial institution" (broadly defined to include banks, broker-dealers, mutual funds, FCMs, IBs, MSBs and DFIs) may not transmit funds from, to, or through PM2BTC, or any account or convertible-virtual-currency (CVC) address administered by or on behalf of PM2BTC. A safe-harbour clause provides that a covered FI does not violate the order if, upon determining it has received CVC originating from PM2BTC, it rejects the transaction and returns the CVC to the originating account or address.

The terms of the order took effect 11 October 2024 (the date of Federal Register publication) with no cessation date. The FinCEN Notice and Order were signed on 26 September 2024 — the announced date used here.

Coordinated context

The PM2BTC special measure was one leg of a coordinated 26 September 2024 US action against Russian-origin virtual-currency illicit-finance infrastructure. On the same day:

• OFAC designated Cryptex (a related virtual-currency exchange platform)

under E.O. 14024 Russia-sanctions authority;

• OFAC designated Sergey Sergeevich Ivanov, a Russian national identified

by Treasury as a key cybercrime facilitator linked to PM2BTC, Cryptex, UAPS and Taleon Holdings;

• the State Department announced a reward of up to USD 10 million for

information leading to Ivanov's arrest/conviction.

This action complements but is distinct from the EU/UK and existing US secondary-sanctions perimeter against Russian banks; the PM2BTC prohibition specifically forecloses CVC-rails routing as a sanctions-evasion channel.

Downstream implications

• First operational use of CRMLA Section 9714(a) special-measure authority —

establishes precedent for treating designated Russian VASPs as Section-311-equivalent persona non grata in the US correspondent-banking / wallet-on-ramp system.

• Broadens the perimeter against Russian sanctions-evasion CVC rails:

compliance teams at US banks and US-touching VASPs must now screen for PM2BTC-administered wallet addresses (FinCEN guidance and OFAC SDN list cross-reference).

• Adds enforcement-risk pricing for any US-nexus counterparty that does not

implement the rejection-and-return safe-harbour procedure.

Open questions

• Whether FinCEN will continue to use Section 9714(a) (rather than only

Section 311) for future Russia-connected VASP designations.

• Whether other G7 jurisdictions (UK OFSI, EU Council Regulations,

Switzerland SECO) will mirror with parallel prohibitions on PM2BTC / Cryptex.