Building Your OFAC Compliance Program Around Cryptocurrency Transactions
Cover Photo: Map of Countries with Strong Interest in the
Cryptocurrency Ethereum as of 2021
With the current explosion of NFTs and transactions taking place in what has been deemed as the "metaverse," many businesses have been wondering what government regulatory actions will eventually be taken to regulate crypto-based transactions.
Our firm is building a legal framework for ensuring your cryptocurrency and NFT transactions are legally compliant with the Office of Foreign Assets Control (OFAC), before the official regulations even start. Request our Tip Sheet on OFAC, Cryptocurrencies, and NFT Transactions to learn about the four mandatory actions you need to build a compliance program around cryptocurrency transactions.
There has already been a wide range of litigation including ownership of cryptocurrency, trademark and copyright infringement regarding NFTs and criminal prosecution for theft of cryptocurrency. The important takeaway from all of these cases is that cryptocurrency transactions do not have the level of anonymity as many people often thought in the past.
The Office of Foreign Assets Control (OFAC) maintains and enforces the majority of the United States' sanctions programs. Any time a business completes a transaction involving an import or export, they may potentially violate a sanction program depending on where and who the service is being performed for, or a good is being sold to. Cryptocurrencies and NFT transactions have made this concept complicated as OFAC defines these transactions as potential "deemed exports," which are further defined in our previous blog article.
OFAC is clearly positioning itself to regulate digital transactions as they have already started to define the aspects of such transactions. Every exporter (which includes a seller of a digital asset to a foreign purchaser) needs to begin structuring their compliance programs to be inclusive of digital transactions and all of the necessary components to facilitate them to ensure that they remain in compliance as the way that transactions are facilitated have been changing drastically.
Four (4) very clear actions will be essential for both building an OFAC compliance program around the trade of cryptocurrencies and showcasing a clear effort of attempting to avoid sanctions violations if OFAC ever does find a violation in the future.
To learn more about what these four actions are, click the button below to complete our form and we will send you a free copy of our Tip Sheet on OFAC, Cryptocurrencies, and NFT Transactions.
The key phrase to be kept in mind when building a compliance program is reason to know. OFAC can investigate a sanctions program violation for years before sending a notice of potential civil liability to a business or individual. If it can be demonstrated that the business or individual made a proactive effort to avoid sanctions violations, OFAC will significantly lessen the amount of penalties owed.
A legal compliance program built around cryptocurrency transactions can seem intuitive for an avid crypto trader, but when it comes to the reason to know standard it becomes much more complicated.
Need help navigating the waters of an OFAC investigation or the threat of one? Click here to contact us for assistance.
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