May 12, 2023 - Technology

IRS bolsters Ukraine's hunt for sanctions evaders

Illustration of a life preserver in the colors of the Ukrainian flag.

Illustration: Maura Losch/Axios

The Internal Revenue Service is providing new cyber aid to the Ukrainian government as both parties try to up their efforts to identify Russian oligarchs looking to evade international sanctions.

Driving the news: The IRS Criminal Investigation team (IRS-CI) and Chainalysis announced Thursday the two are donating blockchain analysis tools and new cyber trainings to several Ukrainian government agencies.

  • The IRS-CI donated enough licenses for Chainalysis Reactor, a crypto investigations tool, for up to 15 users.
  • Nearly 20 Ukrainian investigators are also participating in an in-depth, dayslong training that started Thursday in Germany to learn more about blockchain and cryptocurrency tracing.
  • Members of the National Police of Ukraine, the Economic Security Bureau of Ukraine, the Security Service of Ukraine's cyber department, and the Prosecutor General's Office of Ukraine are participating in the training.

What they're saying: "In a globally connected world, we cannot afford to not work together, because of how fast these transactions move," Jim Lee, chief of the IRS-CI, told reporters during a press call ahead of the announcement.

  • "I view what we're doing here today as a step forward in strengthening that relationship and that partnership with our Ukrainian partners," he added.

The big picture: Tracing cryptocurrency transactions on the blockchain has become a fixture in ransomware and sanctions investigations.

  • U.S. law enforcement was able to claw back part of Colonial Pipeline's bitcoin ransom payment in 2021 after tracing the flow of funds between the pipeline and its extorters.

The intrigue: The IRS-CI plays an integral role in these crypto-tracing cases, and the team doesn't just track down people involved in tax-related crimes.

  • The IRS also partners with various federal law enforcement offices on everything from sanctions investigations to cybercrime plots.

Between the lines: The IRS-CI has 23 ongoing sanctions-related investigations, according to a press release, and is providing trainings to foreign allies helps bolster those investigations.

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