560. Are my OFAC compliance obligations the same, regardless of whether a transaction is denominated in digital currency or traditional fiat currency?
Yes, the obligations are the same. U.S. persons (and persons otherwise subject to OFAC jurisdiction) must ensure that they block the property and interests in property of persons named on OFAC’s SDN List or any entity owned in the aggregate, directly or indirectly, 50 percent or more by one or more blocked persons, and that they do not engage in trade or other transactions with such persons.
As a general matter, U.S. persons and persons otherwise subject to OFAC jurisdiction, including firms that facilitate or engage in online commerce or process transactions using digital currency, are responsible for ensuring that they do not engage in unauthorized transactions prohibited by OFAC sanctions, such as dealings with blocked persons or property, or engaging in prohibited trade or investment-related transactions. Prohibited transactions include transactions that evade or avoid, have the purpose of evading or avoiding, cause a violation of, or attempt to violate prohibitions imposed by OFAC under various sanctions authorities. Additionally, persons that provide financial, material, or technological support for or to a designated person may be designated by OFAC under the relevant sanctions authority.
Persons including technology companies; administrators, exchangers, and users of digital currencies; and other payment processors should develop a tailored, risk-based compliance program, which generally should include sanctions list screening and other appropriate measures. An adequate compliance solution will depend on a variety of factors, including the type of business involved. There is no single compliance program or solution suitable for every circumstance. [03-19-2018]
1) "Additionally, persons that provide financial, material, or technological support for or to a designated person may be designated by OFAC under the relevant sanctions authority."
The constriction of that phrase suggests that OFAC would secondarily sanction and/or derivatively designate non-U.S. persons involved in cryptocurrency creation/processing.
2) Refer to FAQ 73 and FAQ 445 on diligence expectations for internet based payment processors and internet based companies generally, as well as Civil Enforcement Information - PayPal, Inc. (2015). Diligence in the crypto context is likely to be trickier.
3) The reference to "causing" violations in the context of cryptocurrencies is significant: OFAC would assert jurisdiction over any non-U.S. person "causing" a U.S. person to deal in cryptocurrency in which a blocked person has an interest, including by involving U.S.-based digital currency exchanges in otherwise-prohibited transactions.
4) See OFAC Director A. Gacki; Interview Concerning Cryptocurrency Industry Compliance (Transcript), for a collection of notable statements concerning OFAC compliance expectations vis-a-vis the cryptoasset industry.
5) Note the implication that, for the purposes of the boilerplate definition of "property" that appears in blocking regulations, cryptocurrency is "property" the possession or control of which can trigger blocking obligations.