COMPLIANCE IMPERATIVES IN DIGITAL CURRENCY: TAKEAWAYS FROM RECENT OFAC ACTIONS
The landscape of finance and digital currency is rapidly evolving, bringing new opportunities and challenges for businesses. As digital currency platforms gain prominence, they face increasing scrutiny from regulatory bodies like the Office of Foreign Assets Control (OFAC).
In the last decade, enforcement actions against platforms such as Bittrex, BitGo, Kraken, BitPay and Poloniex underscore the critical importance of robust sanctions compliance in this sector.
These cases reveal similarities in the compliance deficiencies of digital currency industries, highlighting the need for proactive measures to prevent unauthorised transactions and ensure adherence to international sanctions regulations.
Robust sanctions compliance programmes
The importance of implementing a comprehensive sanctions compliance programme cannot be overstated. The case of Bittrex, Inc., which faced a hefty penalty of $24,280,829 for an astonishing 116,421 apparent violations in 2022, underscores this point.
Bittrex operated without a sanctions programme from its founding until December 2015. When it did create a programme, the programme relied on incomplete screening practices and allowed a significant volume of transactions with sanctioned jurisdictions. This case highlights that digital currency platforms must prioritise the development and maintenance of rigorous compliance programmes to avoid substantial fines and legal repercussions.
BitGo, Inc.’s case further exemplifies the need for diligent compliance measures. BitGo faced a settlement in 2020 of $98,830 for 183 apparent violations involving users in Crimea, Cuba, Iran, Sudan and Syria. Despite tracking users’ IP addresses for security purposes, BitGo failed to utilise this data for sanctions compliance.
Jan-Mar 2025 Issue
Amalie Trade Compliance Consulting