The Department of the Treasury’s Office of Foreign Assets Control (OFAC) on Wednesday announced a settlement with digital asset platform BitGo for lapses in its sanctions compliance procedures that led to 183 apparent violations of multiple sanctions programs.
BitGo will pay $98,830 to settle its liability after individuals located in the sanctioned regions of Crimea (Ukraine), Cuba, Iran, Sudan, and Syria were able to access its digital currency services. OFAC deemed the case “non-egregious,” and the penalty represents a tiny fraction of the $53 million maximum in the matter.
The details: Between March 2015 and December 2019, BitGo allegedly tracked the location of user IP addresses for account security but did not utilize the information for sanctions compliance purposes. Thus, as OFAC explained in its Web notice, individuals in the sanctioned regions listed above were able to access certain services, resulting in 183 digital currency transactions totaling $9,127.79.
BitGo had the capability to determine the location of these users, given its account security protocols, but it “generally relied on each user’s attestation regarding their location and did not perform additional verification or diligence on the location of its users,” according to OFAC. The company learned of the apparent violations in January 2020 and took immediate action.
Remedial measures: BitGo did not voluntarily self-disclose the apparent violations, OFAC stated. In cooperating with the agency’s investigation, BitGo overhauled its compliance commitments, most notably through the hiring of a chief compliance officer specifically responsible for implementing and providing guidance on matters related to U.S. sanctions. The company now screens all accounts against OFAC’s Specially Designated Nationals and Blocked Persons List.
Compliance takeaway: “This action highlights that companies involved in providing digital currency services—like all financial service providers—should understand the sanctions risks associated with providing digital currency services and should take steps necessary to mitigate those risks,” OFAC stated. “… To mitigate such risks, administrators, exchangers, and users of digital currencies should develop a tailored, risk-based sanctions compliance program.”