Parties who identify a digital currency address or wallet that they believe is owned by or affiliated with an individual or entity on the SDN should file a report with OFAC and, if the party holds the property, take steps to block the relevant digital currency. In its guidance, OFAC defines digital currency broadly to include “sovereign cryptocurrency, virtual currency (non-fiat), and a digital representation of fiat currency.” This definition covers typical cryptocurrencies (Bitcoin, Litecoin, Ethereum, etc.) and the purportedly oil-backed “petro-gold” token issued by the government of Venezuela. Yes, it is possible to query for digital currency addresses using OFAC’s Sanctions List Search tool. Users of the tool may search for digital currency addresses by inputting the hash value into the “ID #” field and then clicking “Search.” The ID # field does not use fuzzy logic, so only exact matches will be returned when searching for digital currency addresses with the Sanctions List Search tool. On October 15, 2021, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a compliance guide for the virtual currency industry and updated the answers to frequently asked questions (FAQs) 559 and 646.
Mr. Fayhee’s practice focuses on internal and cross-border investigations, acquisition due diligence, trade secret theft, white-collar criminal defense, cybersecurity, national security reviews of foreign acquisitions, and matters arising under the False Claims Act. Nicholas Coward is a partner in Baker McKenzie´s Washington office and serves as chair the Firm’s Global Trade and Commerce Practice Group. He has over 30 years experience practicing in the areas of US export controls, trade sanctions and the Foreign Corrupt Practices Act. Mr. Coward served on the Washington Office management committee from 1990 to 2002 including two terms as managing partner and served on the Firm’s Executive Committee from 2002 to 2007.
Those dealing in virtual currency should make it a priority to comply with OFAC regulations, implement controls internally to mitigate the risks, and stay up to date on the most recent publications by the US Treasury. US economic sanctions cover all “US persons,” which includes any US citizen, permanent resident alien, entity organized under the laws of the United States, or any person in the United States. In the case of some OFAC sanctions programs, the prohibitions also apply to non-US entities that are owned or controlled by US persons. OFAC also maintains secondary sanctions to deter non-US persons from engaging in a range of activities, even if the activities do not involve any US elements. These can be found by grepping for”Digital Currency Address” on the sdn_advanced.xml file.
Mr. Kramer is Chair of the Firm’s North American FinTech practice and is a member of the Firm’s Global FinTech Steering Committee. He is recognized in Chambers Global, Chambers USA, the Legal 500 USA and Who’s Who Legal. The lists branch of this repository contains automaticallyupdated lists of sanctioned addresses for each covered asset. Virtual currency is a digital representation of value that functions as (i) a medium of exchange; (ii) a unit of account; and/or (iii) a store of value; is neither issued nor guaranteed by any jurisdiction; and does not have legal tender status in any jurisdiction. It is the first time OFAC has moved directly to prevent the illicit use of cryptocurrencies since signalling in March of 2018 that it would be actively monitoring emerging payment systems and blockchain technologies.
Alexandre Lamy joined Baker McKenzie in 2009 and currently works in the Firm’s International Trade Practice Group. He assists clients with sanctions and export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and he advises clients on corporate compliance matters. Since August 2011, Alex has served on the steering group for the ABA Section of International Law’s Export Controls & Economic Sanctions Committee and is currently a Vice Chair of the Committee. He has organized several events regarding recent developments in US trade sanctions and export controls for the Committee. Sam Kramer is a partner in Baker McKenzie’s Chicago office in the Intellectual Property and Technology practice. He represents customers in managed services, IT procurement, complex licensing, and supply chain agreements, with a focus on the financial services industry.
To apply online to have the virtual currency released, please go to OFAC’s online application page. Virtual currency is a digital representation of value that functions as (i) a medium of exchange; (ii) a unit of account; and/or (iii) a store of value; and is neither issued nor guaranteed by any jurisdiction. Before sharing sensitive information, make sure you’re on a federal government site. All American Document Services makes it easy to view all relevant risk information about any individual or company, either on an ongoing basis or on demand. We have been trusted by large companies for streamlined OFAC searches, verification reports, and background checks since 2002. Generally, OFAC imposes civil penalties for sanctions violations using a “strict liability” legal standard (i.e., without regard for whether a person has knowledge or reason to know of the violation).
OFAC’s plans to add digital currency addresses to the SDN List will mean greater risk for companies and a matching increase in compliance cost. The Office of Foreign Assets Control (“OFAC”), responsible for enforcing U.S. economic sanctions, has taken its first steps to tackle the exploding use of digital currencies. On March 19, 2018, OFAC released a digital currency-related FAQ indicating that OFAC may include digital currency addresses on its Specially Designated Nationals (“SDN”) list of blocked persons, companies and entities. A digital currency wallet is a software application (or other mechanism) that provides a means for holding, storing, and transferring digital currency.
