On November 28, 2022, the Office of Foreign Assets Control (OFAC) announced a $362,158.70 settlement agreement with Payward, Inc. (Kraken), an online virtual currency exchange, in connection with 826 apparent violations of the Iranian Transactions and Sanctions Regulations. This enforcement action highlights the OFAC compliance risks for virtual currency platforms and comes on the heels of the Bittrex settlement which we discussed here. Again, it is critical to assess your risks and take steps to make sure you’re addressing them with smart compliance and screening measures.

Continue Reading OFAC Continues Focus on Virtual Currency Industry with Announced Settlement with Payward, Inc.

Settlement Agreement with Bittrex, Inc.

Today, on October 11, 2022, the Office of Foreign Assets Control (OFAC) announced a $24,280,829.20 settlement agreement with Bittrex, Inc., an online virtual currency exchange and hosted wallet service provider, in connection with 116,421 apparent violations of multiple sanctions programs. This enforcement action highlights the OFAC compliance risks for virtual currency platforms. So, assess your risks and take steps to make sure you’re addressing them with smart compliance and screening measures.

Continue Reading OFAC Announces Hefty Settlement with Virtual Currency Exchange / Hosted Wallet Services Provider

On September 30, 2022, the Office of Foreign Assets Control (OFAC) published compliance guidance for instant payment systems. The guide highlights the need for emerging payment technology companies to assess their sanctions risks and implement compliance programs that mitigate those risks. Specifically, the guidance: (i) reaffirms that financial institutions should take a risk-based approach to managing sanctions risks; (ii) highlights key factors that may be relevant in determining that risk-based approach; (iii) encourages the development and deployment of innovative sanctions compliance approaches and technologies to address identified risks; and (iv) encourages developers of instant payment systems to incorporate sanctions compliance considerations as they develop new payment technologies.

Continue Reading OFAC Issues Sanctions Compliance Guidance for Instant Payment Systems

After Mahsa Amini was killed in the custody of “Gasht-e-Ershad” or Iran’s Guidance Patrol, commonly referred to as Iran’s morality police, following an arrest for placement of her hijab, protests have erupted throughout Iran over women’s rights and Iran’s authoritarian regime more generally. Iran’s police and other security forces are retaliating severely against protestors. In response to these human rights abuses, on September 22, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) sanctioned Iran’s morality police and senior leaders of Iran’s security organizations for the violence against protesters.

Continue Reading Technology to Iran: OFAC Lifts Certain Iran Sanctions In Response to Protests in Iran

On Sunday, the Department of Treasury’s Office of Foreign Assets Control (OFAC) announced novel and sweeping sanctions on specific categories of services in order to cripple Russia’s wartime capabilities and sanctioned key individuals at Russian banks and state-owned television stations. Concurrently, the Bureau of Industry and Security (BIS) made available for public inspection a final rule expanding export restrictions by imposing a license requirement for exports, reexports, or transfers (in-country) to and within Russia on additional items subject to the Export Administration Regulations (EAR).

Continue Reading Novel Sanctions Against Business-Related Services Connected to Russia and Additional Export Restrictions

The Treasury Department’s Office of Foreign Assets Control (OFAC) took action last Monday, November 8, 2021, and sanctioned a Latvia-based exchange, Chatex, its associated support network, and two ransomware operators for facilitating financial transactions for ransomware actors. In total, OFAC designated Chatex and 57 cryptocurrency addresses (associated with digital wallets) as Specially Designated Nationals (SDNs). OFAC took this action pursuant to Executive Order 13694, issued in 2015, which provides broad sanctions authority to address the national security threat posed by malicious cyber-actors outside the United States.

Continue Reading OFAC Enforcement Impacts NFTs: As Crypto Enforcement Ramps Up to Combat Ransomware, Robust Compliance is Key

Background

Last Friday, the Office of Foreign Assets Control (OFAC) published more targeted guidance for digital asset companies related to compliance with sanctions and best practices for mitigating risks. This guide comes on the heels of OFAC’s first enforcement action against a cryptocurrency exchange, SUEX (which we discussed in our blog here). Given the rise of ransomware threats from malicious cyber-actors that are often linked to sanctioned countries and persons, the lack of very robust regulatory oversight of the virtual currency world, the emerging nature of the technologies, and the growth of the market, it is clear that OFAC hopes crypto companies will pay more attention to sanctions risks and compliance with the issuance of this guidance. While the guide covers a lot of familiar territory, we outline a few key takeaways below.

Continue Reading Sanctions Compliance for Crypto: OFAC Issues Guidance Targeting Virtual Currency Industry

Yesterday, the Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions on SUEX OTC, S.R.O, a cryptocurrency exchange, for its role in laundering money to ransomware attackers. According to OFAC, SUEX facilitated criminal transactions involving at least eight ransomware variants and 40% of SUEX’s known transaction history involved bad actors. The designation of SUEX is the first time OFAC has sanctioned a virtual currency platform – and this approach may prove to be a useful regulatory tool to make malicious cyberactivity less profitable and therefore deter cyber-criminals. Treasury Secretary Janet Yellen said the government is “committed to using the full range of measures, to include sanctions and regulatory tools, to disrupt, deter, and prevent ransomware attack[s].”

Continue Reading First OFAC Sanctions Against a Cryptocurrency Exchange: Could the Designation of SUEX Signal an Enforcement Trend to Combat Cybercrime?