Cyrpto Firms Likely Underreporting Sanctions Breaches, UK Says
The U.K. last week released a threat assessment of the sanctions compliance risks involving British "cyptoasset" firms, saying those companies have likely underreported suspected sanctions breaches to the Office of Financial Sanctions Implementation since August 2022. Although most cases of noncompliance by these companies have occurred "inadvertently due to common issues such as direct and indirect exposures to" sanctioned people, the U.K. said it expects that some of the violations have involved dealings with the sanctioned Russian exchange Garantex. It also said crypto firms are "at risk of being targeted" by North Korean hackers and added that some British crypto firms are likely "facilitating transfers to Iranian cryptoasset firms with suspected links" to sanctioned parties.
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The 34-page report offers tips U.K. companies can follow up with to strengthen compliance and outlines a list of red flags that may signal a crypto firm or their customers are violating sanctions, including if they carry out large or unusual transactions immediately following sanctions announcements, create new digital wallets that receive large transfers or suddenly reactivate previously dormant wallets, or frequently change their address.