Russia is ramping up its crypto monitoring infrastructure with a proprietary tool for tracing digital asset transactions. According to a website aggregating data on government contracts, the country’s top financial watchdog has granted a $200,000 contract to develop a platform for tracking crypto-related transfers.
The Russian Federal Financial Monitoring Service, also known as Rosfinmonitoring, has selected a company named RCO to develop a tool for tracking Bitcoin and other crypto transactions. RCO is owned by one of Russia’s leading IT service providers Rambler -- which belongs to the country’s largest bank Sberbank through a chain of companies.
As per data on the government website, Russia has allocated 14.7 million rubles -- or USD 200,000 to "work on the creation of a module for monitoring and analyzing cryptocurrency transactions using bitcoin."
The procurement documentation states that RCO will be tasked with the development of a crypto tracing module that tracks the movement of digital assets, maintains a database of cryptocurrency wallets related to illicit activities, and monitors crypto owners’ behavior to assess their role in economic activity.
Once it’s deployed, the proposed system will generate profiles of participants in the cryptocurrency market and use them to identify the likelihood of their involvement in criminal acts. Additionally, Rosfinmonitoring intends to use the module to trace money financing drug trafficking and ensure safe and “targeted use of budget funds.”
Rosfinmonitoring floated the idea of leveraging artificial intelligence for analyzing crypto transactions in August last year. At the time, a prototype of the project known as “Transparent Blockchain” was developed and field-tested in countering drug trafficking. Reports indicate that the country’s Ministry of Internal Affairs and several foreign financial intelligence agencies showed interest in the project.
In February, Rosfinmonitoring head Yuri Chikhanchin discussed the benefits of the “Transparent Blockchain” project with President Vladimir Putin. He said the tool would enable the agency to identify all movements of assets that attempt to hide behind cryptocurrencies. Shortly after, the agency decided to “partially” reduce the anonymity in Bitcoin, Ethereum, and Monero transfers, while highlighting their role in criminal activities.