Sanctions Compliance Framework for Digital Asset Firms

OFAC, Global Sanctions Programs & Crypto Enforcement

Sanctions compliance is a strict liability obligation for crypto firms - no intent to violate is required for penalties to apply. This whitepaper covers the full sanctions compliance framework for digital asset businesses: screening customers and UBOs against OFAC's SDN list and other global sanctions programs, blocking blockchain addresses linked to sanctioned entities, geo-blocking IP addresses from comprehensively sanctioned jurisdictions, and handling sanctions hits with appropriate escalation and reporting procedures. Key enforcement cases - including the $4.3 billion Binance settlement, OFAC's landmark designation of Tornado Cash smart contract addresses, and penalties levied against ShapeShift, BitGo, BitPay, and Exodus - illustrate the breadth and strict nature of enforcement. The whitepaper also addresses the unique challenges of sanctions compliance in DeFi, the treatment of privacy coins and mixing services, and the tools used for name screening and crypto address blacklisting.