October 11, 2022

Virtual Currency Exchange Fined for BSA and Sanctions Violations

A virtual currency exchange settled simultaneous OFAC and FinCEN charges for violating multiple sanctions regulations and failing to implement a sufficient AML program.

According to OFAC, the exchange maintained accounts for individuals in sanctioned jurisdictions, including the Crimea region of Ukraine, Cuba, Iran, Sudan and Syria. OFAC said that despite possessing physical and IP-related information collected during the onboarding process that would have located the individual account holders in sanctioned jurisdictions, the exchange was not screening customer registrations to determine if a registrant was located in a sanctioned jurisdiction. As a result, OFAC found that the exchange operated 1,730 prohibited accounts, although it did implement significant sanctions compliance measures once an OFAC subpoena indicated that its vendor was not properly screening new customer accounts. To settle this matter, the exchange agreed to remit $24,280,829.

In a separate order, FinCEN found that the exchange also failed to implement a proper AML compliance program. In particular, the exchange improperly relied on as few as two employees to manually review as many as 20,000 transactions a day for potentially suspicious activity. FinCEN found that the exchange did not file a single suspicious activity report for the first three years of its operation. A further investigation revealed the exchange failed to report suspicious activity in several instances during that time. To settle the matter, the exchange agreed to remit $29,280,829.

FinCEN said that a sufficient AML program would have likely prevented the exchange's violations of multiple OFAC sanctions regulations.

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