HM Treasury's OFSI warns of crypto sanctions risks in new threat assessment report

The UK Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, has published a sector-specific threat assessment report highlighting significant compliance risks facing UK cryptoasset firms in relation to financial sanctions. Covering the period from January 2022 to May of this year, the report concludes it is "almost certain" that UK cryptoasset firms have underreported suspected sanctions breaches since being designated as "relevant firms" under the UK sanctions regulations, in August 2022. OFSI identifies inadvertent non-compliance due to direct and indirect exposure to designated persons (DPs) and sanctioned entities such as the Russian exchange Garantex, cyber threats from DPRK-linked hackers exploiting cryptoassets to evade sanctions and transfers to Iranian cryptoasset firms with suspected links to DPs. The report emphasises the importance of timely and accurate reporting, enhanced due diligence and the use of blockchain analytics to detect and mitigate sanctions risks. OFSI urges firms to adopt a risk-based approach, conduct retrospective reviews and report any suspected breaches to OFSI, the UK Financial Conduct Authority and the National Crime Agency.

Return to main website.