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Date: April 7th 2022
Published on: Global News
Crypto AML, Crypto Compliance, Cryptocurrency, Cryptoregulation, Garantex, Hydra, OFAC, Risk assessment, RiskAML, sanction compliance,
OFAC announced sanctions against the Russian exchange Garantex and Hydra dark web marketplace after German Authorities shut it down. As a result, OFAC added 100+ related crypto addresses to its SDN list.
On Tuesday, Germany’s Federal Police (Bundeskriminalamt – BKA) issued a press release announcing it shut down Hydra. Russian-based Hydra was the world’s largest dark web marketplace. Indeed, the Federal Police has been able to seize the German servers of the dark web marketplace. It has also confiscated 543 Bitcoins worth around €23 million in the process.
Hydra has been around since at least 2015. It specialized in the sale of narcotics as well as forged and stolen documents. The service was accessible on the dark web via Tor. It amassed large amounts of users, especially during the pandemic, accounting for 19,000 vendors and 17 million accounts. According to BKA, Hydra sold for at least €1.23 billion in 2020. The BKA estimates that it was the illegal marketplace with the largest turnover worldwide.
On the same day, the Office of Foreign Assets Control (OFAC) announced placing sanctions on Hydra. The designation aims to “disrupt proliferation of malicious cybercrime services, dangerous drugs, and other illegal offerings”. OFAC further explains that this operation has been possible thanks to the collaboration between the US Department of Justice, FBI, DEA, IRS, and Homeland Security Investigations and the international cooperation with German authorities.
According to OFAC’s announcement, Hydra facilitated the transit of $8 million related to Ryuk, Sodinokibi, and Conti ransomware variants.
Besides, OFAC also sanction the crypto exchange Garantex which was operating from Russia. Indeed, the exchange facilitated the laundering of ransomware-related funds. Garantex thus joins Russian-based exchanges Suex and Chatex on the Specially Designated Nationals (SDN) list. According to OFAC, $100 million related to illicit actors, dark web markets, including Hydra, and ransomware-as-a-service (RaaS) gang Conti transited through Garantex.
Additionally, OFAC announced that it sanctioned 100+ crypto addresses related to Hydra and Garantex. It will keep adding more as they become available. Find the full list of crypto addresses sanctioned on April 5 here.
OFAC concludes by stressing the importance of implementing effective international AML/CFT standards for cryptocurrencies and crypto exchanges. Such standards are indeed critical to preventing sanction evasion through cryptocurrencies.
Blockchain analytics helps companies monitor their crypto transactions, and spot specific red flags and sanctioned addresses. while reducing their exposure to money laundering (ML) and terrorism financing (TF) risks.
For instance, Scorechain’s database is automatically updated with the latest cryptocurrency addresses added to OFAC’s SDN list. Sanctioned addresses are thus automatically red-flagged and assigned a low Risk-AML score. This means that they carry increased ML and TF risks.
As shown below, users can easily spot if an address is on the OFAC sanction list and can take prompt measures.
To further reduce exposure to funds related to sanctioned addresses, users can set up the “OFAC sanction list” risk indicators. It will trigger if an address, a transaction, or an entity has links to a sanctioned address. Thanks to risk indicators, companies can for instance refuse to process some transactions.
For instance, the address in the screenshot below has links with sanctioned addresses from Chatex and Garantex. And this is why the risk indicator triggered. We can see that the address received funds from Chatex and Garantex and sent funds to Garantex. The address thus represents high risks in terms of ML/TF and companies should avoid transacting with it.
Besides, Scorechain users can also investigate and report more complex ML/TF cases with the Exploration Tool, the Case Manager, and KYT and KYA reports. The solution provides compliance teams with all the tools needed to implement holistic AML/CFT policies.
It is vital for companies offering cryptocurrency services to avoid funds related to sanctioned addresses. Doing so will allow them to reduce their exposure to money laundering (ML) and terrorism financing (TF) risks and ensure compliance.
However, analyzing blockchain transactions and implementing risk mitigation policies cost a lot of time and resources without the proper tools to facilitate the process.
Scorechain Blockchain Analytics tools help such companies to implement anti-money laundering (AML) and combat the financing of terrorism (CFT) processes to ensure compliance with regulatory requirements on cryptocurrencies.
Don’t hesitate to request a demo to see how the solution can adapt to your own needs in terms of crypto compliance.
Scorechain is a Risk-AML software provider for cryptocurrencies and digital assets. As a leader in crypto compliance, the Luxembourgish company has helped more than 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 solution supports Bitcoin analytics with Lightning Network detection, Ethereum analytics with all ERC20 tokens and stablecoins, Litecoin, Bitcoin Cash, Dash, XRP Ledger, Tezos, Tron with TRC10 and TRC20 tokens, and BSC with BEP20 tokens. The software can de-anonymize the Blockchain data and connect with sanction lists to provide 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.