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Uphold HQ fined $72,000 for violating OFAC sanctions

To resolve allegations made by the Treasury Department's Office of Foreign Assets Control (OFAC) that Uphold HQ processed sanctioned transactions for individuals in Iran and Cuba as well as government employees in Venezuela, Uphold HQ, a California-based money services company, will pay $72,230.

OFAC claimed that from 2017 to 22, Uphold or its affiliates made 152 transactions worth a total of $180,576 with people in countries that were subject to American sanctions. According to its website, Uphold supports money service transactions in 184 countries using more than 200 different currencies, including cryptocurrencies.


Despite being sanctioned jurisdictions, Uphold allegedly permitted customers who self-identified during onboarding that they were situated in Iran and Cuba to complete transactions. Customers provided their nation of origin in free text boxes on their applications, which Uphold did not check for compliance with sanctions, according to OFAC's enforcement announcement released on Friday.


According to OFAC, Uphold executed 16 transactions with an Iranian virtual currency exchange totaling $13,706 from 2017 to 2022 and 53 transactions worth $22,870 for clients in Iran and 25 transactions for $142,684 for consumers in Cuba.


Additionally, the business allegedly executed 58 transactions totaling $1,317 for two clients who identified themselves to be Petroleos de Venezuela personnel during customer due diligence.


The apparent violations were submitted voluntarily by the company, and OFAC determined that they were not egregious.

According to OFAC, Uphold and its affiliates "ffailed to exercise due caution or care when [they] onboarded or conducted diligence on customers" who self-identified as being in sanctioned countries or working for the Venezuelan government. The agency noted that they "implemented inadequate screening and other compliance processes to identify, analyze, and address these risks."


According to the regulator, Uphold cooperated with OFAC's investigation, supplied organized and thorough documentation, and engaged into a tolling arrangement with OFAC.


Uphold implemented automatic restrictions on transactions attempted with beneficiaries in sanctioned jurisdictions, increased compliance staff, increased sanctions training for all staff, and implemented periodic sanctions risk assessments in addition to suspending all accounts in sanctioned jurisdictions. The company also implemented software that screened free text fields and identification documents for sanctions compliance.


This case emphasizes how crucial it is for financial institutions, including those who offer services related to virtual and traditional currencies, to keep strong controls in place to screen customer information for sanctions risks, according to OFAC. Financial institutions should think about "ways to address the potential for customers to circumvent such screening controls" in addition to screening identify and location information for sanctions compliance during customer due diligence and onboarding, the regulator added.


Uphold Chief Executive Simon McLoughlin issued the following comment via email: "We appreciate that OFAC recognized our full cooperation and remediation of the issues involved in this matter. These were self-identified and self-reported matters that reflect the rigor of our compliance review processes."

By fLEXI tEAM

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