OFAC updates its Specially Designated Nationals List
On February 1, 2023, the United States Office of Foreign Assets Control (OFAC) updated its Specially Designated Nationals (SDN) List, adding specific Ethereum and bitcoinThe term "Bitcoin" can either refer to Bitcoin the network, ... More addresses along with several individuals and entities.
OFAC, which sits within the US Department of the Treasury, administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. OFAC administers various sanctions programs, ranging from comprehensive to selective, and can target specific jurisdictions, individuals, companies, and governments.
What does this mean?
In simple terms, this means that US persons, entities, and businesses must immediately stop transacting with these addresses and associated entities/individuals identified on the SDN List or any related property/interests owned more than 50% by these listed entities and must blockBlocks hold batches of valid transactions that are hashed an... More the blockchainA blockchain is a shared digital ledger, or a continually up... More addresses.
Why is this important?
It’s been an active year for SDN additions associated with virtual assets and virtual asset-related activities. If any US persons, entities, or businesses engage in business in any way with these sanctioned parties or addresses, they will risk enforcement, potentially resulting in civil and criminalA Criminal is an individual or group who has been convicted ... More penalties. If any property or interest of these listed entities is in control at or after the time of listing by the US or a US person, they must be reported to OFAC.
How can blockchain analytics tools help?
CipherTrace Inspector™ and similar blockchain analytics tools allow financial investigators and analysts to visually trace transactions on the blockchain to follow cryptocurrencies, spot cryptocurrencyA cryptocurrency (or crypto currency) is a digital asset des... More threats and identify risky or illicit activities. If it is determined that an addressIn a cryptocurrency context, an address is a cryptographic k... More has been added to a sanctioned list by OFAC, this is attributed in blockchain analytic tools. Further, if it is determined that a sanctioned individual or entity has control of a walletA wallet is a device (a hardware device, a program, or servi... More, this can be attributed in blockchain analytics tools. In both cases, users will be able to trace activity to/from/through the sanctioned addresses giving the funds visibility that traditional currencies may not be able to offer OFAC or other agencies.