Bittrex, Inc. (Bittrex), a cryptocurrency exchange with headquarters in Bellevue, Washington, has reached settlements with the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury. The settlements were for sums totaling over $24 million and $29 million, respectively.
The current enforcement action against virtual currencies by OFAC is its biggest. Additionally, it constitutes the first concurrent enforcement operations in this area by FinCEN and OFAC.
Investigations by FinCEN and OFAC discovered deliberate breaches of the Bank Secrecy Act’s (BSA) anti-money laundering (AML) and suspicious activity report (SAR) reporting requirements as well as apparent violations of many sanctions programs.
Actions against Bittrex emphasize the need to follow sanctions
These enforcement proceedings serve as a reminder to the virtual currency sector of the value of putting in place suitable risk-based sanctions compliance measures and abiding by BSA requirements.
If nothing is done, OFAC and FinCEN laws may be broken, and exchanges and other participants in the virtual currency business may be vulnerable to misuse by criminals.
“When virtual currency firms fail to implement effective sanctions compliance controls, including screening customers located in sanctioned jurisdictions, they can become a vehicle for illicit actors that threaten U.S national security.”
said OFAC Director Andrea Gacki
In order to resolve its possible civil responsibility for 116,421 alleged breaches of many sanctions programs, Bittrex has agreed to pay $24,280,829.20 to OFAC. Because of flaws in its procedures for adhering to sanctions, Bittrex allowed individuals who were allegedly based in the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria to use its platform.
The users from this region conducted transactions worth about $263,451,600.13 in virtual currency between March 2014 and December 2017.
For its willful breaches of the BSA’s AML program and SAR requirements, Bittrex has agreed to pay $29,280,829.20. According to FinCEN’s review, Bittrex had a subpar AML procedure in place from February 2014 to December 2018. This included using transaction monitoring tools that were insufficient and inefficient, which significantly exposed its platform to illegal funding.
Bittrex will pay $53 million in combined fines to the treasury to settle the allegations.