red 
Key points:
- The FEND Off Fentanyl Act was passed by US lawmakers.
- While the FEND Act provides a strong framework to address the fentanyl crisis, the use of block analysis solutions is critical to ensuring the success of these legislative compliance teams’ efforts.
- Read on to learn how you can leverage blockchain analytics to comply with the FEND Act and the actions you should consider.
The devastating impact of fentanyl and other synthetic opioids on families and communities, along with the unique challenges it poses to financial systems, prompted the introduction of the FEND Off Fentanyl Act by US lawmakers.
This bill aims to combat the fentanyl crisis.
In this blog, we delve into the implications of the FEND Off Fentanyl Act for compliance and investigative teams, and highlight how blockchain analytics is key to disrupting the trade of fentanyl and other deadly opioids.
The FEND Act: A legislative response to the crisis
The FEND Off Fentanyl Act represents a comprehensive approach to addressing the fentanyl crisis by strengthening sanctions and improving regulatory frameworks. Key provisions of the Law include:
- Sanctions and penalties: Imposing strict sanctions on foreign entities and individuals involved in fentanyl trafficking.
- Reporting Requirements: Requiring detailed reporting from financial institutions, including crypto exchanges, to ensure transparency in transactions potentially related to drug trafficking.
- Improved collaboration: Encouraging greater collaboration between US government agencies and international partners to disrupt global fentanyl supply chains.
Obligations for crypto companies
Crypto exchanges and digital wallet providers must implement robust compliance programs that can detect and report suspicious activity related to the fentanyl trade.
FinCEN’s Advising Financial Institutions on Illicit Financial Schemes and Methods Related to the Trafficking of Fentanyl and Other Synthetic Opioids provides clear guidance, red flags and instructive typologies for the practical application of tactics and strategies to reduce the risks associated with fentanyl. This includes using advanced blockchain analytics to track and analyze transactions.
Immediate actions to improve your compliance program
Crypto companies and financial institutions can take several proactive steps to reduce the risk of their platforms being used for illegal activities:
- Update your policies and procedures: Ensure that your risk-based AML/CFT and sanctions compliance policies and processes are updated to take into account the risks associated with the fentanyl trade.
- Improve KYC/AML procedures: Strengthen Know Your Customer (KYC) and Anti-Money Laundering (AML) processes to identify and verify the identities of their users.
- Cooperation with law enforcement authorities: Establish dedicated channels of communication with law enforcement agencies to facilitate the exchange of information related to drug trafficking.
- Invest in blockchain analytics: Deploy advanced blockchain analytics solutions to monitor and analyze transaction data for signs of illegal activity.
- Educate users: Implement educational programs to inform users about the legal risks associated with engaging in transactions related to drug trafficking.
While the FEND Act provides a strong framework to address the fentanyl crisis, the role of crypto companies and the effective use of blockchain analytics will be critical in ensuring the success of these legislative efforts.
By taking proactive measures and leveraging technology, the crypto industry, in partnership with law enforcement and intelligence agencies, can significantly contribute to curbing this devastating epidemic.
Leverage on-chain to prevent crypto-asset exploitation
How can crypto companies and financial institutions leverage blockchain analytics to comply with the FEND Act?
The right partner with a broad and accurate data set will help in:
- Transaction tracking: Real-time monitoring of crypto transactions to identify patterns indicative of illegal drug trafficking.
- Wallet Overview: Checking and flagging wallets associated with known drug traffickers or suspicious activities.
- Regulatory reporting: Automated tools to generate reports that comply with regulatory requirements, ensuring crypto companies can quickly respond to law enforcement requests.
The Power of Blockchain Analytics to Fight Global Fentanyl Trafficking
Crypto leaves criminals nowhere to hide: blockchain transparency allowed us to expose the illicit trade in chemicals key to the production of fentanyl in our report Crypto and the Global Fentanyl Trade, published last year.
Elliptic continues to monitor the synthetic opioid crisis, specifically the rise in fentanyl-related deaths and the public health and safety issues it poses in the United States and around the world.
Contact us if you would like to discuss our investigative findings and gain a deeper understanding of how you can leverage innovative blockchain analytics to enhance your investigative capabilities and improve the effectiveness of your compliance function.
Regulation on compliance with the law
