Russia's Hottest Startup Is a State-Backed Sanctions Evasion Network — WSJ

By Alexander OsipovichRussia's war effort in Ukraine might be faltering, but the Kremlin has a high-tech superweapon to neutralize Western sanctions.It is called A7. The state-backed payment network moves money in and out of Russia, defying U.S. and European efforts to isolate Moscow from the global banking system. A7 helps Russia pay for everything from military-drone parts to luxury cars to imported fruit, using a mix of cryptocurrency transactions and more-traditional banking methods, researchers say.Behind its rapid rise is a convicted money launderer. A7's founder, Ilan Shor, is best known for his role in one of the biggest bank heists in history: a complex scheme to extract $1 billion from three banks in Moldova, one of Europe's poorest countries, in 2014. A Moldovan court convicted him of fraud and money laundering for helping orchestrate the theft, but he fled the country while under house arrest.Shor has denied the allegations and called them politically motivated. The fugitive businessman, who is married to a Russian pop singer, now lives near Moscow. A boyish-looking 39-year-old, Shor goes by "Travolta" in A7's internal company chat, according to leaked messages circulated by hackers last year.Representatives of A7 and Shor didn't respond to requests for comment.Founded less than two years ago, A7 says it handles nearly 20% of payments in Russian foreign trade, or more than $100 billion annually. President Vladimir Putin gave it his blessing last year, taking part by video link in the opening of an A7 branch office.Now, A7 is planning to take its services global and fulfill Putin's vision of an alternative financial system outside the control of Washington or Brussels. Having recently opened its first offices abroad, in Nigeria and Zimbabwe, A7 says it is eyeing expansion into Latin America and the Middle East. Executives don't hide their desire to serve countries seen as pariahs in the West."Before, the Western system essentially enslaved the whole financial world, allowing the West to flip a switch at any time and stop any country from being able to make payments," Shor told TASS, the Russian state news agency, in July. "We give companies and countries freedom, because our system is immune to sanctions."The U.S., U.K. and European Union have all sanctioned A7. But analysts say the payment network has adapted to Western pressure, and it openly touts its resilience in the face of sanctions.In June, during Russia's annual flagship economic forum in St. Petersburg, A7's stand featured a giant roly-poly toy with the company's logo. The Russian term for such toys — which always spring back to vertical — is also an expression for a tenacious person who powers on despite adversity.After keeping a low profile in its early days, A7 embarked on a mass advertising campaign. Digital billboards in Moscow hype its low rates for sending money abroad, a bid to market its services to smaller companies and individuals, like a sort of Western Union focused on international money transfers. One of Russia's most popular singers, Filipp Kirkorov, sang a ditty about A7's defiance of European sanctions in one promotional video.A7's website demonstrates its reach by showing flags of dozens of countries, including the U.S., China and Iran.A7 has benefited from rapid growth in Russian trade with China, which has surged since the start of the war with Ukraine as Moscow has drawn closer to Beijing. Some 65% of the payment network's volume takes place in Chinese yuan, according to a presentation circulated by A7 last year. On its website, the company touts its ability to transmit funds to China in four hours.In 2024, Shor teamed up with Promsvyazbank, a Russian state-owned bank that focuses on the defense sector, to launch A7. The bank, now called PSB, was among the first Russian lenders to be sanctioned by the West and cut off from the Swift network after Putin's invasion of Ukraine. Swift, a Belgium-based messaging system used by thousands of banks worldwide, is the lifeblood for much of international commerce.Initially, Russia's corporate registry showed Shor owned 51% of A7 while PSB owned the rest. The registry still shows the bank's 49% stake but hides the majority owner. Russian law allows companies to obscure ownership data to avoid foreign sanctions.To skirt sanctions, A7 moves money through a network of shell companies in places such as Kyrgyzstan, Hong Kong and the United Arab Emirates, according to the Open Source Centre, a London-based research group that was spun out of RUSI, the U.K.'s oldest defense-oriented think tank. Such shell companies have credible-looking websites and accounts at local banks, but are secretly controlled by A7 staff in Moscow, OSC wrote in a June report.Using its shell companies' access to the banking system, A7 can make payments on behalf of clients in Russia. To avoid raising red flags at the banks, A7 uses artificial intelligence to create fake invoices that obscure the real purpose of the transactions, OSC said. The forgeries have featured realistic-looking stamps generated with OpenAI, the research group found.OpenAI has found no evidence that A7 is currently using its models, a person familiar with the matter said.On March 11, 2025, a Kyrgyz front company for A7 paid a Chinese supplier about $1 million for components used in drones — but the fake invoice showed that the payment was for auto-body polish, child car seats and other car accessories, according to OSC.The group's report was based on a trove of A7 files and chat logs that were released by hackers last September. OSC said it corroborated information from the hack with customs records, court filings and other sources.A7 hasn't commented on the hack, although a Shor-backed political group hit by the hack has said the leaked documents included fabricated conversations.Crypto is the other main tool that A7 uses, allowing it to bypass banks entirely, researchers say."Crypto in A7's operations functions as a channel for actors who have been excluded from conventional banking — and have few alternatives," TRM Labs, a U.S.-based blockchain analytics firm, said in a report in June.A7 backed last year's launch of A7A5, a digital token pegged to the value of Russia's currency, the ruble. Blockchain analysts say A7A5 is used to pay for sanctioned goods by swapping it for U.S. dollar-backed stablecoins such as Tether. More than $2.2 billion has moved through one such A7A5 swapping service, according to Chainalysis, another blockchain-analytics firm.Chainalysis found that most A7A5 activity takes place Monday through Friday, before dropping off sharply on weekends, suggesting that it is used by the Russian government and businesses to settle cross-border accounts during normal business hours.Global expansion could be the ultimate test of A7's ability to thumb its nose at Western financial gatekeepers. The payment network says it reaches more than 100 countries worldwide, and executives have suggested that A7 could become a Russian-led alternative to Swift.In July, the EU put A7's African affiliates in its latest round of anti-Russia sanctions. Still, the company's international ambitions shouldn't be dismissed, according to Elise Thomas, an investigator at the Centre for Information Resilience, a nonprofit research group based in London and backed in part by the U.K. government."Reaching the level of a Swift equivalent would be very ambitious," said Thomas, who has studied A7. "But never say never. It's a threat worth taking seriously."Write to Alexander Osipovich at [email protected]