Crypto Exchange Bittrex to Pay Sanctions Breaches Fines to OFAC & FINCEN
Bittrex, Inc., a company located in Bellevue, Washington, offers an online virtual currency exchange as well as hosted wallet services. Bittrex was accused by the U.S. Department of the Treasury’s Office of Foreign Assets Control of violating programs against Cuba, Iran and Sudan as well as Ukraine-related sanctions.
According to OFAC Bittrex did not prevent people from being located in sanctioned countries from using its platform for virtual currency transactions. This is because Bittrex was unable to stop them. These sanctions generally forbade U.S. citizens from transacting with these jurisdictions. Bittrex knew that these customers were located in countries subject to sanctions based on their internet protocol (“IP”) addresses and physical addresses. Bittrex did not screen the customer information for sanctioned jurisdictions at the time of the transactions.
In this case, there was no voluntary disclosure. Bittrex agreed TO remit $24.3M to OFAC in settlement of its civil liability for 116.421 violations of multiple sanction programs.
Bittrex was also under investigation by the U.S. Financial Crimes Enforcement Network, FinCEN. The investigation found that Bittrex had failed to implement an effective anti-money laundering program (AML) from February 2014 to December 2018. It also found that Bittrex had ineffective and inadequate transaction monitoring, which led to significant exposure to illicit financing. Bittrex’s AML program did not adequately address the risks associated its products and services, including anonymity-enhanced cryptocurrency. Bittrex did not file any Suspicious Activity reports (SARs), between February 2014 and May 2017. Bittrex failed to file SARs for a large number of transactions involving sanctioned countries, as well as transactions that were suspicious beyond the fact that they were in a sanctioned country.
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Bittrex was required to pay $29.3 million under a Consent order for willful violations of AML and SAR regulations. FinCEN will credit this amount for the OFAC settlement.
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This is OFAC’s largest virtual currency enforcement operation to date. This is also the first simultaneous enforcement action by FinCEN, OFAC in this area.