Uphold HQ, a California-based money services company, will pay $72,230 to settle charges levied by the Treasury Department’s Office of Foreign Assets Control (OFAC) that it processed sanctioned transactions for persons in Iran and Cuba and government employees in Venezuela.
OFAC alleged Uphold or its affiliates processed 152 transactions totaling $180,576 with individuals in jurisdictions under U.S. sanctions from 2017-22. Uphold facilitates money service transactions in 184 countries across more than 200 currencies, including cryptocurrencies, according to its website.
The details: Uphold allegedly allowed customers who self-identified during onboarding they were located in Iran and Cuba to complete transactions, despite being sanctioned jurisdictions. The customers indicated their country of origin in free text fields within their applications, which Uphold did not screen for sanctions compliance, said OFAC in its enforcement release published Friday.
From 2017-22, Uphold processed 53 transactions worth $22,870 for customers in Iran, 25 transactions worth $142,684 for customers in Cuba, and 16 transactions with an Iranian virtual currency exchange totaling $13,706, according to OFAC.
In addition, the company allegedly processed 58 transactions worth $1,317 for two customers who self-identified during customer due diligence as being employees of Petroleos de Venezuela, a state-owned entity.
The company voluntarily self-disclosed the apparent violations; OFAC considered them non-egregious.
Compliance ramifications: Uphold and its affiliates “failed to exercise due caution or care when [they] onboarded or conducted diligence on customers” who self-identified as being in sanctioned jurisdictions or employed by the government of Venezuela, according to OFAC. They “implemented inadequate screening and other compliance processes to identify, analyze, and address these risks,” the regulator added.
Uphold cooperated with OFAC’s investigation, provided well-organized and detailed documentation, and entered into a tolling agreement with OFAC, the regulator said.
In addition to suspending all accounts in sanctioned jurisdictions, Uphold implemented software that screened free text fields and identification documents for sanctions compliance, with weekly and independent tests of its performance; implemented automatic restrictions on transactions attempted with beneficiaries in sanctioned jurisdictions; increased compliance staff; increased sanctions training for all staff; and implemented periodic sanctions risk assessments.
“This case underscores the importance of financial institutions—including those that provide services related to virtual and traditional currencies—maintaining robust controls to screen information provided by customers to identify sanctions risks,” OFAC said. In addition to screening identification and location information for sanctions compliance during customer due diligence and onboarding, financial institutions should also consider “ways to address the potential for customers to circumvent such screening controls,” the regulator continued.
Company response: “We appreciate that OFAC recognized our full cooperation and remediation of the issues involved in this matter,” said Uphold Chief Executive Simon McLoughlin in an emailed statement. “These were self-identified and self-reported matters that reflect the rigor of our compliance review processes.”