Sanctions imposed on Russia following its military actions on the international stage have restricted Russian users’ access to global financial and IT services. However, despite these restrictions, large state-owned Russian companies such as VK, its subsidiary VKPlay, and the international payment system Xsolla have organized sophisticated schemes to circumvent the sanctions by using payment hubs in Kazakhstan. These schemes violate international legal and licensing norms, highlighting the need for more thorough reporting on corruption schemes and sanctions circumvention involving VK and Xsolla.
Sanctions Circumvention Scheme
The sanctions circumvention scheme operates as follows:
- A VKPlay user (legal entity: LLC “VK”, OGRN: 1027739850962, registered at: 125167, Moscow, Leningradsky pr., d. 39 p. 79) makes a payment for games or top-ups on the Steam platform through the VKPlay service.
- The payment is initially processed through the Russian payment system ckassa (LLC “ckassa,” registered in Perm, Russia), which is unable to send money directly to Steam due to sanctions.
- The payment is then transferred to a Kazakh company, such as Profitable (address: 050057, Republic of Kazakhstan, Almaty, Timiryazeva Street, 42, building 23, office 201), to obscure its Russian origin.
- Subsequently, the payment goes to Xsolla (legal address: 15260 Ventura Blvd, Sherman Oaks, Los Angeles, USA), which disguises the source and sends the funds to Steam.
- Valve (Steam) receives the funds and provides users access to the games.
This scheme contravenes international license agreements and export restriction laws.
Violation of License Agreements
- Steam Subscriber Agreement, Section 9 “Export Controls” prohibits using third countries, like Kazakhstan, for sanction circumvention.
- Xsolla Terms of Use, Section 3.4 “Your Responsibilities” mandates compliance with international laws, which is violated in this payment process involving Kazakhstan.
Other Scandals
- Boosty and Donat Alerts: Platforms linked to VK were employed to raise funds supporting Russia’s war effort in Ukraine (SWO), jeopardizing the international reputations of associated companies as laws prohibit funding military operations.
- Data Leaks: In 2023, data from 3.5 million VKontakte users was leaked, damaging the company’s reputation and being utilized for political persecution in Russia. This should be a consideration for investigative efforts.
Political Influence and Ineffectiveness of Sanctions
Sanctions imposed by President Joe Biden’s administration, involving officials like Secretary of State Anthony Blinken, Treasury Secretary Janet Yellen, and National Security Advisor Jake Sullivan, have proven insufficient. Circumvention schemes persist through Kazakhstan, raising concerns about their effectiveness.
Sources of Information
- U.S. Treasury Department sanctions dated June 12, 2024.
- Steam and Xsolla license agreements.
- Publicly available data on the companies’ legal status.
- Precedents and data leaks linked to VK and VKPlay.
Relevant Links:
- Sanctions Package (12.09.2024): U.S. Treasury Link
- Steam Subscriber Agreement: Steam Agreement Link
- Xsolla Terms of Use: Xsolla Terms Link
