Virtual currency exchange CoinList Markets agreed to pay more than $1.2 million to settle allegations from the Treasury Department’s Office of Foreign Assets Control (OFAC) that it violated U.S. sanctions by processing transactions for customers located in the Crimea region of Ukraine.
San Francisco-based CoinList allowed 989 transactions on behalf of users in Crimea worth nearly $1.3 million on its platform between April 2020 and May 2022, according to OFAC’s enforcement release Wednesday. The transactions resulted in apparent violations of U.S. sanctions against Russia, which took control of Ukraine’s Crimea region in 2014.
The details: CoinList had sanctions compliance controls in place that screened new and existing customers against sanctions lists. In February 2021, it added controls to deny access to customers with IP addresses in sanctioned jurisdictions.
However, OFAC said CoinList failed to capture users who represented themselves as being a resident of a non-embargoed country but who provided an address in Crimea.
OFAC considered the apparent violations non-egregious but noted CoinList did not voluntarily self-report them.
Compliance considerations: OFAC said CoinList failed to exercise due caution or care for its sanctions compliance obligations and knew or should have known it was allowing transactions with people who lived in Crimea.
CoinList cooperated with OFAC’s investigation and took remedial measures in response to the apparent sanctions violations. The exchange updated its filters to reject customers who live in Crimea, implemented geoblocking of customers who live in sanctioned jurisdictions, hired new vendors to review and verify customer identification documents, enhanced its training program, and hired additional experienced compliance personnel.
“This enforcement action further emphasizes the importance for virtual currency companies and those involved in emerging technologies to incorporate risk-based sanctions compliance into their business functions, especially when the companies seek to offer financial services to a global customer base,” OFAC said.
Company response: In an emailed statement, a spokeswoman for CoinList said the company was “pleased with the outcome of this settlement.”
“CoinList Markets LLC has and continues to significantly enhance its compliance measures, strengthen control systems, and improve training within our company,” she said. “Our unwavering commitment to compliance is reinforced through our agreement to invest $300,000 into compliance controls—one of the largest investments made by a crypto company in our position.”