international regulatory enforcement
The Blocking of Digital Currency: A New Phase of Sanctions Enforcement
By Behnam Dayanim, Dina Ellis Rochkind, Lara Kaplan & Talya R. Hutchison
On November 28, 2018, the U.S. Department of the Treasury's Office of Foreign Assets Control (“OFAC") for the first time published the digital currency addresses associated with specific individuals subject to sanctions. OFAC, the primary agency in charge of administering U.S. economic sanctions programs, has the authority to block property of persons involved in “malicious cyber-enabled activities" originating from outside of the United States and who constitute a threat to national security or the financial stability of the United States. It now has used that authority in a new way: blocking specific digital currency addresses associated with two persons who assisted in a cyberattack.
For the first time, OFAC has identified digital currency addresses as being associated with sanctioned persons.
Transactions involving these OFAC-identified digital currency addresses are now prohibited.
This move, if successful, will have ramifications for all sanctions programs, but particularly Iran.
Institutions now have an obligation to block digital currency transactions associated with these sanctioned persons and report to OFAC.
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