OFAC latest sanctioned crypto addresses: How to mitigate ML/TF risks?

Key takeaways:

  • OFAC recently added crypto addresses to its sanction list.
  • It contains BTC, BCH, ETH, LTC, DASH, XVG, and ZEC addresses.
  • Such addresses have a high level of ML/TF risks.

The Office of Foreign Assets Control (OFAC) has recently updated its Specially Designated Nationals (SDN) list to include new individuals, entities, and also cryptocurrency addresses.

On April 15, OFAC announced taking action against 16 individuals and 16 entities that allegedly tried interfering in the latest US presidential elections and that it was investigating related cryptocurrency addresses.

What is OFAC sanction list?

OFAC is a financial intelligence and enforcement agency from the US Treasury Department. It is in charge amongst others with US economic and trade sanctions.

On its SDN list, OFAC lists individuals and entities owned, controlled, or acting for targeted countries or individuals or entities linked to terrorism or drug trafficking. Their assets are blocked and dealing with them is forbidden. More information can be found on OFAC’s website.

It is important for financial institutions and virtual asset service providers (VASPs) to consider sanction lists because they represent an increased risk and play an important role in AML/CTF policies.

Updated OFAC sanction list 

Several cryptocurrency addresses have been added to OFAC’s sanction list including notably 14 Bitcoin addresses, 2 Bitcoin Cash addresses, 5 Ethereum, and 4 Litecoin addresses, 1 DASH address, 1 XVG address, and 1 ZEC address.  Some of these wallets are hosted on exchange platforms while others are unhosted. Some of the wallets are also not active yet. The full list is available here.

How to mitigate risks associated with OFAC Sanction list?

With Scorechain Blockchain Analytics platform, companies dealing with cryptocurrencies can easily monitor funds associated with sanctioned addresses.

  • Scorechain’s database is updated promptly with the latest data from OFAC and flags sanctioned addresses as “OFAC sanction list” to which is assigned a low score of 1. Users are thus notified if an address is from OFAC’s sanction list and immediately know that they represent a high level of risk.
  • This low score is also reflected on the entities and addresses that deal with the funds from sanctioned addresses at some point. The example below shows the scoring of two addresses that received funds from or sent funds to an OFAC sanctioned address.
  • If the users have set “OFAC sanction list” as a risk indicator in advance, a prompt notification will be displayed when it is triggered on an address or a transaction. They will know at once that the address or the transaction has been involved with funds from a sanctioned address.
  • Furthermore, the notification of risk indicator also provides detailed information to the users such as the amount of funds and the portion that is associated with a sanctioned address.
  • Last but not least, this information is also displayed in KYT and KYA reports, which is very useful for the compliance team to file Suspicious Transaction Report (STR) / Suspicious Activity Report (SAR).

Sanction lists play an important role in AML and CTF policies. Therefore, it is fundamental for VASPs to have in place processes and tools to mitigate risks that stem from addresses from Economic Sanction lists. Scorechain is the right solution to help you with this issue.

Feel free to contact us for a demo: contact@scorechain.com   

About Scorechain

Scorechain is a Risk-AML software provider for cryptocurrencies and digital assets. As a leader in crypto compliance since 2015, the Luxembourgish company serves worldwide customers in 36 different countries with more than 150 licenses established, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets customers onboarding, audit and law firms and some LEAs.

Scorechain solution supports Bitcoin analytics with Lightning Network, Ethereum analytics with all ERC20 tokens and stablecoins, Litecoin, Bitcoin Cash, Dash, XRP Ledger and Tezos. The software can de-anonymize the Blockchain data and connect with sanction lists to provide a risk scoring on digital assets transactions, addresses and entities. The risk assessment methodology applied by Scorechain has been verified and can be fully customizable to fit all jurisdictions. 300+ risk-AML scenarios are provided to its customers with a wide range of risk indicators so businesses under the scope of the crypto regulation can report suspicious activity to authorities with enhanced due diligence.