Virtual Currency Exchange Settles OFAC Charges of Iran Sanctions Violations
Commentary by Michael T. Gershberg
A virtual currency exchange settled OFAC charges for violating the Iranian Transactions and Sanctions Regulations.
According to OFAC, the exchange processed cryptocurrency transactions for account holders that were located in Iran. OFAC said that despite maintaining an AML and sanctions compliance program that prevented Iranian users from opening accounts, the exchange failed to timely implement a system that would have prevented Iran-based users from accessing the exchange by blocking Iran-based internet protocol addresses.
To settle the matter, the exchange agreed to (i) remit $362,158 and (ii) invest an additional $100,000 to improve applicable sanctions compliance controls, including training and technical measures to assist in sanctions screening. OFAC said that the exchange voluntarily self-disclosed the apparent violations, which constituted a non-egregious case.
Commentary
OFAC appears focused on the U.S. cryptocurrency system as it continues a recent pattern of pursing enforcement actions against players in the virtual currency industry. This settlement reinforces the importance of employing both sanctions screening and IP address blocking (or other location identification tools) upon account opening and prior to processing transactions.