OFAC Fines Crypto Wallet Firm $3.1M

[umair]

U.S. regulators have taken firm action against a cryptocurrency wallet provider, issuing a $3.1 million penalty for violations tied to Iran-related sanctions. The case highlights how digital asset companies are now firmly within the scope of traditional financial crime enforcement and are expected to meet the same compliance standards as banks and other regulated institutions.

The violations occurred over an extended period and involved multiple transactions linked to users located in a sanctioned jurisdiction. Investigators found that internal controls were weak and, in some cases, employees failed to properly follow sanctions restrictions. This allowed prohibited users to access services that should have been blocked under U.S. law. Regulators emphasized that sanctions rules apply regardless of whether a company operates in traditional finance or in the crypto ecosystem.

A key takeaway from this case is the importance of effective compliance programs. Crypto firms are expected to implement strong location screening, transaction monitoring, and escalation procedures. Simply having policies on paper is not enough. Staff must be trained to understand sanctions risks and must never suggest or tolerate workarounds that undermine controls. Regulators are increasingly looking at internal communications and customer support practices when assessing compliance failures.

The penalty also reflects a broader trend of heightened scrutiny on the digital asset sector. Authorities are signaling that innovation does not excuse non-compliance, and that companies dealing with global users must be especially careful when operating across borders. Sanctions enforcement is becoming more sophisticated, and crypto firms are no longer seen as outside the regulatory perimeter.

Overall, this enforcement action serves as a warning to the wider industry. Crypto companies that invest early in strong compliance frameworks, clear staff guidance, and regular risk reviews will be better positioned to avoid costly penalties and reputational damage in the future.