OFAC virtual currency industry guidance

Recently, the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, released a report on ransomware trends stating that during the first half of 2021, 68 different ransomware variants extracted approximately $600 million from victims across the country. FinCEN identified Bitcoin as the most common ransomware-related payment method in reported transactions and noted that ransomware incidents requesting Monero (XMR) – what FinCEN refers to as an anonymity-enhanced cryptocurrency – are increasing as hackers seek to reduce the transparency and traceability of such transactions.

Given this environment, the White House and Treasury Department have sought to counter the ransomware threat by taking a number of actions, including holding a virtual two-day multinational summit on ransomware, conducting classified threat briefings for critical infrastructure executives, and establishing some expected cybersecurity thresholds for critical infrastructure providers. Compounding these efforts, the Treasury Department is leveraging existing Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) controls that already apply to fiat currency and enforcing them more deliberately toward virtual currency to combat ransomware attacks.

Two days after the White House issued its October 13, 2021 Fact Sheet detailing these anti-ransomware efforts, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued its “Sanctions Compliance Guidance for the Virtual Currency Industry” (“Guidance”).