Sanctions Compliance Oracle
CipherTrace DeFi Compli simplifies sanctions compliance for Decentralized Finance
CipherTrace DeFi Compli is a compliance oracle on Chainlink that enables DeFi developers and DEX operators to integrate necessary sanctions compliance data and services into their smart contracts to meet regulatory obligations and protect their decentralized applications from transacting with sanctioned addresses.
OFAC sanctions compliance for
Sanctions screening across three blockchains
“[DeFi Projects] are likely subject to various laws already, including securities law, potentially banking and lending laws—definitely AML/CTF laws.”
–Valerie Szczepanik, Head of the Strategic Hub for Innovation and Financial Technology at the
U.S. Securities and Exchange Commission (SEC)
Benefits of using DeFi Compli
With CipherTrace DeFi Compli, DeFi projects can meet regulatory requirements, protect from terrorism financing, proliferation of weapons of mass destruction and other threats to national security.
OFAC Sanctions Violations
At the end of 2020, the US Treasury’s Office of Foreign Asset Control (OFAC) levied its first enforcement action against a virtual asset service provider—BitGo—for more than 100 sanctions violations. By February 2021, OFAC levied another enforcement action against a VASP, this time for 2,102 apparent violations of multiple sanctions programs.
sanctions compliance obligations apply to all US persons, including those involved in providing digital currency services.
In its enforcement actions, OFAC emphasized that “sanctions compliance obligations apply to all US persons, including those involved in providing digital currency services.”
As part of its settlement with OFAC, BitGo had to implement a new sanctions compliance policy, which now included screening against OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List.
Regulators set sights on DeFi in 2021
In March 2021, global regulatory watchdog the Financial Action Task Force (FATF) updated its definitions for Virtual Asset Service Provider. With over 200 jurisdictions around the world implementing FATF recommendations, this updated guidance could potentially bring new regulatory obligations to owners and operators of decentralized protocols.