What happened? On October 11, OFAC announced that it settled with Bittrex for violating multiple sanctions programs. According to the announcement, Bittrex operated 1,730 accounts and processed 116,421 transactions totaling $263,451,600.13 in violations of OFAC-administered sanctions programs. Accounts from the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria – all regions where U.S. persons are barred from engaging in transactions – reputedly used the Bittrex platform between March 28, 2014, and December 31, 2017. While Bittrex policies and procedures suggested that the company knew OFAC requirements, the company had no internal controls until October 2017 to screen transactions and account holders for a sanctions nexus. From December 2015 through October 2017, Bittrex screened customers against the OFAC’s SDN List but did not scrutinize customers or transactions for a nexus to sanctioned jurisdictions. OFAC issued a subpoena in October 2017 to investigate potential violations. OFAC considered several aggravating factors, such as lack of due diligence and conveying economic benefit to persons in OFAC-sanctioned jurisdictions, as well as mitigating factors, such as Bittrex being a small and new company and fully cooperating with the government
The full enforcement action can be found here. The October 2021 OFAC compliance guidance for the virtual currency industry can be found here.
Notably. First, the settlement emphasizes that virtual currency companies are not exempt from compliance with sanctions programs. Second, the settlement highlights the need for sanctions compliance systems in business operations from the outset. While status as a new business can represent a mitigating factor, it is not a reason not to comply with government regulations.
Other Relevant Enforcement Actions
U.S. Department of Treasury, OFAC: Finding of Violation (FOV).
On October 18, OFAC issued a FOC against Nodus International Bank, a financial entity based in Puerto Rico, for engaging in transactions without the required OFAC license in violation of the Venezuelan Sanctions Regulations. An individual on the SDN List had an interest in the transactions. Additionally, OFAC found Nodus violated the Reporting, Penalties and Procedures Regulations (RPPR) for inadequately maintaining accurate records related to the blocked account. OFAC decided to issue an FOV instead of a civil penalty after weighing aggravating and mitigating factors. OFAC acknowledged Nodus’s lack of prior violations, the fact the company made a voluntary self-disclosure, Nodus’ remedial remedies, and the insignificance of the sanctions’ harm to determine an FOV was sufficient.
The web notice can be found here.
DOC BIS: Probationary Period.
On September 30, Thermotron Industries, Inc. of Holland, Michigan, settled with BIS for one unauthorized export of an environmental test chamber to South Korea in August 2012. In April 2016, after the export at issue, the EAR was revised, making an export license to South Korea unnecessary for the item. BIS denied export privileges for two years, which was suspended provided Thermotron does not violate the EAR. BIS also imposed mandatory export compliance training for relevant Thermotron personnel. Even a single violation from more than a decade ago can lead to enforcement action.
The settlement documents can be found here.
5 International Trade Enforcement Roundup |
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