Before Russia’s full-scale invasion of Ukraine in 2022, Moscow warned that being excluded from the SWIFT interbank messaging system would be considered an "act of war." Four years after major Russian banks were cut off from SWIFT, an investigation has revealed how a Kremlin-backed fintech firm circumvented Western sanctions by funneling more than $6.9 billion through the global banking system within approximately nine months. Some of these funds were reportedly used to purchase sensitive military supplies.
The fintech company, known as A7, exploited weaknesses in the international correspondent banking system, which depends heavily on intermediary banks to perform due diligence on their clients. By using a network of front companies in jurisdictions with weak sanctions enforcement and deficient know-your-customer controls—such as Kyrgyzstan and the United Arab Emirates—A7 effectively gained access to major clearing banks, including Standard Chartered, Citigroup, and JPMorgan Chase.
When suspicions arose among Western correspondent banks regarding transactions routed via banks in Kyrgyzstan, where authorities are seen as sympathetic to Moscow, A7 adjusted by redirecting payments through the United Arab Emirates, where it successfully bypassed banking controls. Observers describe efforts to track such shifts as a continuous game of "whack-a-mole," highlighting the difficulty regulators face in responding to dynamic evasion tactics.
A significant element in A7’s scheme was a large-scale document forgery operation. The company employed thousands of fake stamps and software tools designed to remove Cyrillic lettering from invoices and other documents, thereby spoofing anti-money laundering (AML) checks that rely heavily on document verification. Additionally, A7 established a shadow foreign exchange swap network, allowing foreign currency export earnings from state-controlled companies such as Rosneft to be deposited into front-company accounts abroad and used to settle payments, while oil traders within Russia received payments denominated in rubles.
Though these findings indicate substantial gaps in the enforcement of sanctions, experts note that Russia has yet to develop any fully viable alternatives to the traditional cross-border payment systems. Despite China’s cross-border interbank payment system (CIPS) being launched in 2015 and the increased popularity of cryptocurrencies, Rosneft CEO Igor Sechin has criticized the absence of alternatives, citing a “manyfold increase in total payment and conversion costs” for Russian businesses.
The ongoing challenges posed by money laundering and sanctions evasion underscore the vulnerabilities within the correspondent banking framework, which rests on the assumption that every linked financial institution rigorously enforces AML and sanctions measures. While the tightening of AML controls over the past decade has introduced complexities and inconveniences for compliant banks and customers, analysts warn against the use of overly blunt regulatory tools that could cause unintended consequences.
One suggested approach to strengthening sanctions enforcement is increasing pressure on Russian allies and jurisdictions with lax controls through mechanisms such as secondary sanctions. The United States is viewed as having the greatest capacity to apply such pressure, though its use has been restrained in recent years.
Despite the success of certain evasion tactics, analysts emphasize that sanctions have imposed significant operational costs and barriers on Russia’s war economy. The need to employ costly and complex workarounds signals that sanctions are having an impact, even as efforts continue to address loopholes and fortify the global financial system against further abuse.