OFAC Taking Aim at Cryptocurrency with New FAQs

December 6, 2018

The Office of Foreign Asset Control (OFAC) is taking aim at cryptocurrency and recently issued two new frequently asked questions (FAQs) on how to block digital currency and what banks should tell blocked customers.  The FAQs are provided below:  

646. How do I block digital currency? 

Once it has been determined that your institution is holding digital currency that is required to be blocked pursuant to OFAC’s regulations, you must ensure that access to that digital currency is denied to the blocked person and that your institution complies with OFAC regulations related to blocked assets. Institutions may choose, for example, to block each digital currency wallet associated with the digital currency addresses that OFAC has identified as being associated with blocked persons, or opt to use its own wallet to consolidate wallets that contain the blocked digital currency (similar to an omnibus account) titled, for example, “Blocked SDN Digital Currency.” Each of these methods is satisfactory, so long as there is an audit trail that will allow the digital currency to be unblocked only when the legal prohibition requiring the blocking of the digital currency ceases to apply. The institution is not obligated to convert the blocked digital currency into traditional fiat currency (e.g., U.S. dollars). Blocked digital currency must be reported to OFAC within 10 business days. Questions about whether a transaction should be blocked should be directed to OFAC at 202-622-2490 or ofac_feedback@treasury.gov

647. Should an institution tell its customer that it blocked access to their digital currency and, if so, how does the institution explain it to the customer?

An institution may notify its customer that it has blocked digital currency pursuant to OFAC regulations. The customer has the right to apply for the unblocking and release of the digital currency.

To apply online to have the virtual currency released, please go to OFAC’s online application page

What You Should Know

These FAQs show that the OFAC is looking more closely at digital currency. Financial institutions should consider adopting these FAQs as part of their OFAC programs, if applicable. 


If you have questions about this or how ACA can help, please contact Mark Scarmozzino at mscarmozzino@acatelavance.com
Source: https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_compliance.aspx#646