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Compliance Week: Bitcoin ‘Addresses’ Added to Sanctions Screening

November 29, 2018

The Treasury Department added digital currency identifiers to its sanctions blacklist and created new guidelines on how these should be reported. This comes after the Treasury Department’s Office of Foreign Assets Control (OFAC) acted against two individuals helping to exchange Bitcoin into Iranian rial on behalf of Iranian cyber-criminals.

“Treasury has been looking carefully at the risks that digital currency trading pose in general, and certainly evasion of economic sanctions laws is one of them,” said O’Melveny international trade partner Greta Lichtenbaum. “U.S.-based individuals and corporations have to be careful about violating those rules no matter what kind of economic activity they are involved in, and digital currency trading is particularly risky given that it is often viewed as an alternative to more conventional means of creating value.”

Laurel Loomis Rimon, senior counsel in O’Melveny’s FinTech practice and former general counsel for the Office of the Inspector General at the Department of Homeland Security, adds that, “The action by OFAC in listing the specific digital currency addresses of two individuals is a fulfillment of its warning back in March that it intended to treat digital currency, and those that transact in it, in the same way that it treats fiat currency. [OFAC’s] action highlights the need for financial institutions engaged in digital currency transactions to review their anti-money laundering and sanctions screening programs to ensure they, and any vendors they use, are capturing financial transactions of all kinds and utilizing strong customer identification procedures to connect financial transactions with their true owners.”