Cryptocurrency exchange Kraken has settled claims with the Office of Foreign Assets Control (OFAC) for violating US sanctions against Iran.
Kraken’s management voluntarily disclosed sanctions violations and, after some negotiations, agreed to a $362,000 fine. The company will also invest an additional $100,000 to develop its regulatory and sanctions compliance system.
Kraken violated sanctions with Iran between October 2015 and June 2019. Citizens from Iran made 826 transactions totaling $1.7 million. As it turned out, despite the presence of a system to combat money laundering and comply with sanctions regimes, the exchange did not implement the necessary tools to determine the geolocation and block users from countries under sanctions. Therefore, users from Iran could make transactions on the platform.
“This case shows the importance of using geolocation tools, including IP address blocking systems, and other location verification systems, to detect and prevent users from sanctioned jurisdictions from using the platform. In addition, the use of such instruments only at the time of opening an account may present sanctions risks for companies working with virtual currencies,” the OFAC statement emphasizes.
Kraken representatives noted that after the discovery of violations, the exchange launched a system to automatically block the IP addresses of users from sanctions jurisdictions, and also began using blockchain analytics tools for monitoring. In addition, a separate manager was hired to work in this area.
Recall that the Binance exchange continues to serve clients from Iran, despite statements about “full compliance with international sanctions requirements.” Users from Iran have made about $8 billion worth of transactions through Binance.