BitPay, a prominent Bitcoin payment provider, has consented to pay $507,375 to resolve violations of sanctions rules imposed by the U.S. Treasury’s OFAC (Office of Foreign Assets Control). The OFAC said the violations occurred as BitPay, in 2,102 instances, enabled people settled in sanctioned locations to transact with merchants in the U.S. and outside employing cryptocurrencies on its platform. Moreover, the company knew that it serves users from Ukraine, Cuba, Iran, Sudan, and Syria logged into the BitPay platform based on the I.P. address data it collects.
BitPay faced deficiencies in the sanctions screening process.
BitPay screened its direct consumers and conducted due diligence, ensuring the location did not belong to sanctioned jurisdictions. However, the company failed to verify location data received about its merchant’s buyers. In June 2013 and September 2018, BitPay had losses in the sanctions screening process. It drove $129,000 with persons in sanctioned locations. The firm’s systems failed to investigate all data needed for compliance with OFAC sanctions. They did not perform restrictions to block before-mentioned users from accessing its service.
Furthermore, the company also declined to notify OFAC regarding these transactions. It did not intentionally self-disclose violations of U.S. sanctions. The $500k fine is relatively moderate by OFAC standards, which advocated it could have levied BitPay more than $600 million for the incorrect transactions. Additionally, the mitigated penalty indicates the agency’s decision that BitPay was a ‘relatively small company’ and its corrective measures to discover the possible violations. Moreover, the OFAC has also attributed BitPay to introducing a new consumer identification tool necessary for merchants’ buyers who want to pay invoices beyond $3,000.
The settlement sends a prominent message to crypto businesses. The OFAC itself repeated that digital asset companies should conduct a risk-based strategy to sanctions compliance to discover internal controls’ flaws. BitPay promotes the acceptance of crypto by monitoring, validating, and verifying client transactions on each blockchain. Moreover, Bitpay enables clients to resolve Bitcoin, Ethereum, and Bitcoin Cash on the merchant site. It has alternatives to settle in various stablecoins, involving Circle USDC and Gemini Dollar.
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