red 
As we release the latest version of Elliptic’s Crypto Sanctions Compliance Report, one thing is clear: Sanctions activity affecting the crypto space has become overwhelming.
In February 2022, the US, EU, UK and other countries imposed major financial and trade sanctions on Russia following its attack on Ukraine. While there has so far been no evidence of widespread sanctions evasion by Russia using cryptocurrencies, there are indications that it is exploring ways such as cryptocurrency mining to generate revenue.
This led the US Treasury’s Office of Foreign Assets Control (OFAC) to sanction Russian mining service BitRiver in April 2022. Additionally, the crypto has been implicated in the fundraising activities of Russian paramilitary groups fighting in Ukraine, as we reported in our recent “Crypto in conflict” report.
Sanctions are also increasingly targeting blending services, such as Blender and Tornado Cash, which the US Treasury Department sanctioned last year for facilitating money laundering in North Korea. Sanctions authorities in the US and UK have also trained their sights on the ransomware ecosystem in an effort to fight back against ransomware gangs.
Enforcement for cryptocurrency-related sanctions violations is also heating up, as shown by the US Treasury’s seven-figure settlement with crypto exchange Bittrex last year for apparent sanctions violations involving countries like Iran.
Amid this rapidly evolving sanctions landscape, it is critical that crypto asset companies and financial institutions consider the impact on their compliance operations. They should also proactively take steps and immediately implement available compliance solutions to mitigate significant risks.
Crypto asset businesses and financial institutions must prepare for an increasingly stringent sanctions compliance environment. Those who do not take the appropriate steps now could find themselves in the crosshairs of regulators, risking large fines or penalties. Avoiding businesses with crypto addresses controlled by entities and countries under sanctions should be a top priority for any crypto business or financial institution.
How Elliptic can help
Compliance teams at cryptoasset companies and financial institutions will need to be aware of potential sanctions avoidance activities involving sanctioning jurisdictions such as Russia, Iran and North Korea, as well as entities and individuals on sanctions lists, and should take these risks seriously.
It is important that you take proactive steps now to protect your business from potentially enabling prohibited transactions or interacting with certain individuals or entities. The first essential step is access to a wallet and transaction screening capabilities that can allow you to identify banned crypto addresses and other parties.
Five key steps
In this report, we’ll look at five key steps your business can take to successfully manage the new challenge of cryptocurrency sanctions compliance. these are:
- Introducing effective block tracking solutions and using holistic screening
- Managing your country risk exposure
- Knowing the Red Flags
- Defining your research strategy
- Embedding a comprehensive risk management framework
In the coming months, we’ll go into each of these five steps, so you can learn how to best ensure compliance.
You can also download the full report below.
Download your copy
Sanctions Compliance Financial Services
