The Foreign Corrupt Practices Act (FCPA) is a United States federal law that makes it illegal for individuals and companies to bribe foreign officials in order to gain or retain business. The law applies to any company engaging in business with foreign governments, including cryptocurrency businesses. In this guide, we will walk you through the steps you need to take in order to comply with the OFAC training for sanctions against cryptocurrency businesses.
What is OFAC Training?
OFAC training is the Office of Foreign Assets Control, part of the United States Department of the Treasury. OFAC is responsible for administering and enforcing economic and trade sanctions against foreign countries and regimes. In doing so, OFAC helps keep America safe by protecting our national security and economy.
OFAC has a variety of sanctions programs designed to punish individuals, businesses, and regimes that engage in malicious behavior or violate international law. Programs administered by OFAC training include:
- Sanctions Against Proliferation (SAP) – targets persons or entities who engage in prohibited proliferation activities, including nuclear weapons proliferation; missile development; weapons smuggling, terrorist funding; support for terrorism; and the proliferation of chemical and biological weapons.
- Anti-Money Laundering (AML) – prohibits financial institutions from handling illicit proceeds and implements measures to detect and prevent financial crimes.
- Export Administration Regulations (EAR) – establish export controls that prohibit certain types of exports and require notification to the U.S. government before exports can take place.
- Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) – amended the EAR, including expanding the list of items subject to export control restrictions to include many software applications used in critical infrastructure
What Are the Sanctions That OFAC Imposes?
OFAC training is financial penalties and trade restrictions that the United States imposes on a country or individual. The full list of OFAC training sanctioned countries can be found on the website of the United States Department of the Treasury, and individual sanctions can be found on OFAC’s website.
An overview of each type of sanction can be found below. Sanctions can take many different forms, including:
- Financial: Limits on the amount of currency that a person or entity can hold, transactions that are allowed, or investments that are permissible.
- Exports: US goods, services, technology, or agricultural products cannot be exported to a sanctioned country.
- Imports: US goods, services, technology, or agricultural products cannot be imported from a sanctioned country.
- Prohibitions on dealings with persons or entities: Persons or entities in a sanctioned country cannot do business with persons or entities in the United States.
- Asset freezes and travel bans: These prohibitions prevent people from doing certain things with their assets (for example, buying property) and from traveling to certain places (for example, the United States).
- Penalties: Financial penalties can include fines, loss of property, and restrictions on business activity.
What Are the OFAC Requirements?
All businesses should be aware of OFAC sanctions. OFAC training is the Office of Foreign Assets Control and they oversee Sanctions against countries and individuals. Knowing what the requirements are for OFAC can help businesses avoid any potential issues.
OFAC training has a few requirements for businesses before engaging in cryptocurrency activities. The first requirement is that the business must have a license from the Treasury Department’s Office of Foreign Assets Control (OFAC). The second requirement is that the business must maintain accurate records of their cryptocurrency transactions. The third requirement is that the business must know how to identify and report any violations of sanctions. Finally, the fourth requirement is that the business must not engage in transactions with persons designated by OFAC as Specially Designated Nationals (SDN).
If a business meets all four of these requirements, they are considered compliant with OFAC regulations. However, if there are any questions or concerns about a particular transaction, it is important to contact OFAC for more information.
What Steps Must a Company Take in Order to Avoid Sanctions From OFAC?
When conducting business in the cryptocurrency industry, it is important to be aware of OFAC training sanctions. The steps below will help a company avoid any potential issues.
- Understand the terminology – Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Bitcoin, Litecoin, Ethereum, and other cryptocurrencies are examples of cryptocurrencies.
- Know your jurisdiction – Each country has its own set of sanctions laws, which can vary significantly from one another. Make sure you understand which sanctions apply to your business and which jurisdictions you are working with.
- Be transparent – All cryptocurrency transactions must be recorded and reported for tax purposes. If you are found to be engaging in undisclosed dealings, you may subject yourself to sanctions. Be transparent about your activities and report all your income and expenses on your tax returns.
- Avoid complex financial instruments – Cryptocurrencies are often associated with complex financial instruments, such as Initial Coin Offerings (ICOs). Unless you are experienced in these matters, it is best not to get involved in these types of deals. Stick to straightforward investments in cryptocurrencies and other traditional assets.
What Are the 6 Sanctioned Countries?
The OFAC training sanctions program covers a wide range of topics including money laundering, terrorist financing, commodities fraud, and more. This guide will outline the sanctioned countries and the specific training requirements that apply to businesses operating in these countries.
The following countries are currently sanctioned by OFAC: Cuba, Syria, North Korea, Iran, and Sudan. Businesses operating in these countries must comply with the specific training requirements outlined below.
Cuba: businesses must receive approval from OFAC before undertaking any money laundering activities. They must also comply with the requirements for recordkeeping and reporting specified in OFAC regulations.
Syria: Unless authorized by OFAC, businesses cannot engage in any transactions with Syria or perform any financial services for Syrian entities. Furthermore, all assets of Syrian nationals within U.S. jurisdiction must be frozen or removed.
North Korea: North Korea is a designated state sponsor of terrorism, which means that all transactions with North Korea are prohibited unless authorized by OFAC. All U.S.-based companies must also implement a policy of transparency that includes disclosing all information about their dealings with North Korea.
Iran: Iranian entities are subject to comprehensive sanctions that prohibit any transactions with them, including financial activities and dealings with the Iranian government and its institutions.
Sudan: Sudan is a state sponsor of terrorism, and all transactions with Sudan are prohibited. All U.S.-based companies must also implement a policy of transparency that includes disclosing all information about their dealings with Sudan.
This guide provides an overview of OFAC training sanctions against businesses that deal in cryptocurrencies and related investments. It covers a wide range of topics, including:
- Types of transactions that may trigger sanctions.
- The definition of a “cryptocurrency business” under the SDN List.
- How to determine whether your business is engaged in a cryptocurrency transaction.
- The consequences if your business engages in a prohibited transaction.