OFAC Targets the Schemes Involving Cryptocurrency

By dan saada August 10, 2019 0
OFAC Office of Foreign Assets Control

A cryptocurrency firm in New York promised a 900% return in just two weeks, and the regulators in Texas filed a cease and desist order against the company.

About 15 nations from across the world are teaming up together to monitor suspicious cryptocurrency transfers. Australia and Singapore are among the 15 countries who will be involved in data collection and sharing system in which they will be sharing details about individuals who will be carrying out cryptocurrency transactions.  The common goal in this attempt is to prevent users from being able to launder funds to terrorist organizations.

The Financial Action Taskforce will be designing this system.  The organization will be focusing on combating money laundering and will be establishing detailed strategies by 2020. This system will be active a few years later, and a private sector is operating it.

The OFAC expressed great interest in regulating cryptocurrency with due enforcement. The OFAC expressed its interest in cryptocurrency regulation when Venezuela announced its plans to launch the Petro. 

OFAC then published, “U.S. persons that deal in the prospective Venezuelan digital currency may be exposed to U.S. sanctions risk.” Further recommended that parties dealing in cryptocurrencies “develop a tailored, risk-based compliance program, which generally should include sanctions list screening and other appropriate measures” with an additional advise that it would sanction against “criminals and other malicious actors abusing digital currencies.”

The clear road map of sanctions from the OFAC targets the schemes involving cryptocurrency.  Regulation and enforcement of cryptocurrencies are listed as the major priorities of the Office of Foreign Assets Control. They are actively collecting information from a dozen platforms, and they are creating an SDN’s list – Specially Designed Nationals and Blocked persons.

The OFAC will also consider the intersection between these schemes, which involves ransomware threats and potential cybersecurity issues related to digital currency transactions.

OFAC Guidance requires investors to ensure that applicable laws, rules, and regulations are complied with. Investors are warned not to involve in transactions with coins that are issued by sanctioned countries or with digital addresses which appear on the SDN’s list. Following this, several cryptocurrency exchanges have blocked U.S. customers to avoid regulatory issues.  AML and KYC are the core requirements in any cryptocurrency transaction.

Thailand will be amending its AML norms to regulate cryptocurrency transactions.

The AMLO official comment read thus: “We may not find any clue, but that doesn’t mean the wrongdoing does not occur.”