How blockchain analytics help you tackle sanctions compliance
Effectively adhering to sanctions compliance is critical for any organization aiming to operate legitimately in the crypto space and avoid significant penalties. Amid a rapidly evolving sanctions landscape, the need to meet sanctions requirements is now more mission-critical than ever before.
As such, financial institutions and crypto businesses should be taking immediate steps to implement available compliance solutions and mitigate the risks involved. Those that fail could find themselves in regulators’ crosshairs, risking large fines or penalties.
The consequences of non-compliance
With the Office for Foreign Assets Control (OFAC) treating sanctions violations as a fundamental threat to national security, organizations found guilty of infringements face potential monetary fines that run into millions of dollars.
With the consequences of infringement so high, you need the right blockchain analytics solutions to ensure you’re able to programmatically identify and block engagement with sanctioned entities at scale in real-time.
As OFAC Director Andrea Gacki noted in October 2021: “When virtual currency firms fail to implement effective sanctions compliance controls – including screening customers located in sanctioned jurisdictions – they can become a vehicle for illicit actors that threaten US national security.
“OFAC will continue to hold accountable firms, in the virtual currency industry and elsewhere, whose failure to implement appropriate controls leads to sanctions violations.”
How blockchain analytics solutions can protect Your organization from sanctions risk
Designed specifically to help you tackle crypto and sanctions compliance efficiently and effectively, blockchain analytics solutions integrate seamlessly into your tech stack and workflows to minimize the impact on your day-to-day operations.
In this blog, we’re going to run through the key blockchain analytics solutions you can use to tackle the challenges posed by sanctions compliance.
Wallet screening
With the use of wallet screening and risk scores, organizations can automatically identify if a particular wallet is controlled by a sanctioned entity, before allowing customers to withdraw funds. This means if an entity on OFAC’s Specially Designated Nationals (SDN) list or on an alternative sanctions list tries to engage with your organization, they will be locked out of their funds and unable to take them elsewhere.
Wallet screening in action
The screenshot below shows an attempted withdrawal from a cryptoasset exchange to one of the OFAC-listed Ethereum addresses belonging to Russian cybercriminal Danil Potekhin. Our wallet screening solution recognized the owner and automatically assigned the wallet a maximum risk score of 10, owing to its connection to the sanctioned individual.
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