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Date: February 8th 2023
Published on: Global News, Regulation
Crypto AML, OFAC, RiskAML, Sanction,
Recently, the Office of Foreign Assets Control (OFAC) issued its first crypto-related sanctions of the year. This first wave of sanctions targets individuals and entities supporting Russia’s military complex and evading US sanctions. The aim is to increase pressure on Russia for its invasion of Ukraine and limit its access to funds for the war.
In 2022, OFAC made significant actions in the field of crypto sanctions. The authority imposed restrictions on individuals and entities involved in activities that pose a threat to US national security and foreign policy.
Last year, OFAC implemented sanctions on individuals and entities involved in illicit crypto activities such as money laundering and terrorism financing. Below, we sum up some of the most significant sanction enforcements for the authority.
Hydra was the largest darknet market in the world. The marketplace provided a wide range of illicit goods and services, including drugs and money laundering services, to cyber criminals. However, in April 2022, the German police announced shutting down Hydra and seizing the platform’s servers.
Concurrent with the shutdown, OFAC added the Russia-based marketplace to its sanction list. It also added several crypto addresses as identifiers for its involvement in illicit activities.
This action by OFAC and the German police was a significant blow to the illegal activities facilitated by Hydra. The action served as an example of the ongoing efforts to combat illicit activities in the cryptocurrency space.
Garantex, a crypto exchange operating from Russia, was equally designated at the same by OFAC for facilitating the laundering of ransomware-related funds. As part of this action, OFAC added three crypto addresses as identifying information for Garantex.
Before the designation of Garantex, OFAC had already sanctioned Russia-based crypto exchanges Suex and Chatex for similar reasons.
Read more: Hydra and Garantex designated by OFAC after the dark web market shutdown
In August 2022, OFAC sanctioned Tornado Cash, a decentralized mixing service built on the Ethereum blockchain, for its role in facilitating money laundering. The service was used by cybercriminals tied with North Korea to launder stolen crypto funds, for instance.
This was the second sanction enforcement targeting a crypto mixer. In May 2022, OFAC sanctioned Blender.io, another crypto mixer used by the North Korean state to launder stolen crypto funds.
The sanctions against Tornado Cash highlight the ongoing efforts by regulators to combat illegal activities in the crypto space. Particularly those related to money laundering. OFAC’s action against Tornado Cash serves as a warning to other crypto-related businesses that facilitate illicit activities.
OFAC sanctions Tornado Cash and adds related crypto addresses to the SDN sanction list
The Lazarus Group is a hacking group sponsored by the North Korean state. It has allegedly been implicated in numerous high-profile cyber attacks. Years ago, OFAC imposed sanctions on Lazarus Group, accusing the group of being responsible for the WannaCry ransomware attack and other malicious cyber activities.
Then in 2022, OFAC directly tied the Lazarus group to the large-scale Ronin hack and added related crypto addresses as identifiers for the group.
Lazarus group: OFAC sanctions crypto addresses related to North Korea cybercrime group
In 2022, OFAC also imposed sanctions on additional individuals and entities related to Russia and Iran designations that threatened US national security and foreign policy. These designations resulted in the freezing of assets and a ban on transactions with these individuals and entities under US jurisdiction.
In 2022, OFAC included several crypto addresses as identifiers for sanctioned individuals and entities. In 2023, OFAC continues its sanction efforts and has already issued the first round of crypto-related sanctions. Therefore, OFAC and other regulatory authorities will likely include more crypto addresses in sanction enforcement.
To ensure that your organization remains compliant with the latest crypto sanctions and regulations, it is imperative to implement adequate monitoring through a comprehensive crypto AML solution. Scorechain Analytics is designed to help compliance teams overcome sanction screening challenges. Here’s how we can help.
Every new crypto address added to OFAC’s sanction list is automatically imported and flagged in Scorechain’s database. Scorechain also includes other sanction lists in its database, including from HM Treasury. This allows users to immediately spot if an address or a wallet has been added to a sanction list.
Scorechain Analytics also allows a deeper level of sanction screening. Users can easily track and identify exposure to sanctions through risk indicators configuration and origin and destination of crypto funds analysis.
Scorechain can help ensure your organization’s compliance and security in the constantly evolving field of crypto regulations. Request a demo today.
Scorechain provides blockchain analytics and a transaction monitoring platform for crypto assets. As a leader in crypto compliance, the Luxembourgish company has helped over 200 customers in 45 countries since 2015, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets, customers onboarding, audit and law firms, and some LEAs.
Scorechain’s platform supports 23 blockchains and over 10,000 crypto assets. It can de-anonymize blockchain data and connect with sanction lists to provide risk scoring on crypto 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 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.