Sanctioned oligarchs' use of the Hawala payment system is a desperate move but not necessarily illegal, experts say

Russian billionaires have been able to get around financial sanctions by moving money through the informal payment system.

It is a move that could be seen as desperate.

In the months leading up to the invasion of Ukraine, the president's inner circle appeared to have moved funds through trusts or shell companies.

According to a financial crime expert and CEO of Elucidate, a desperate move using a similar payment system can be considered a sanction. If someone is the ultimate beneficial owner of an account, then that account or asset is sanctioned.

Any attempt to move money out of a sanctioned account is considered a criminal offense. The US Department of the Treasury recently targeted some people for facilitating sanctions evasion.

According to David Claridge, CEO of security intelligence firm Dragonfly, moving money through Hawala can cost up to tens of thousand dollars. The underground payment system would involve hundreds of thousands of smaller transactions than a big one, according to Claridge.

Claridge said that one person is operating on the basis of trust. He said that the arrangement could be used by people who already operate on the same basis as Putin.

Is Hawala being used mainly to evade sanctions? 

Someone using hawala doesn't necessarily mean they are making illegal transactions. There are people who use Hawala for legitimate purposes and it is a lot cheaper.

He said that you can't make assumptions about what's going on if you see hawala dealers. It would be difficult to determine individuals who have used the informal payment system because of their legitimacy.

KleptoCapture is a task force brought together by the US Department of Justice to enforce the sweeping sanctions against Russia. The prosecution of those who try to undermine restrictions is one of the missions of the organization.

In early April, Insider reported that US investigators found evidence of Russian oligarchs attempting to evade sanctions by moving their property into countries where it would be more difficult to investigate.

Russian tycoons face an all-time high level of international cooperation despite their attempts to hide their assets.

Claridge said that in a post-9-11 world, the authorities in the west should regulate hawala banking and other forms of money transfers.