On October 15, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) published tailored guidance for the cryptocurrency industry.
The guidance is designed to assist those in the virtual currency industry in:
- Evaluating sanctions-related risks in their lines of business;
- Building a risk-based sanctions compliance program;
- Protecting their business from sanctions violations and intentional misuse of virtual currencies by malicious actors; and
- Understanding OFAC’s recordkeeping, reporting, licensing, and enforcement processes.
One key point is that the guidance suggests that firms should subject higher risk customers to enhanced due diligence. Many FinTechs have yet to develop a risk scoring methodology capable of implementing such controls. CCOs supporting virtual currency businesses should consider whether they need to enhance their infrastructure to address OFAC’s concerns.