Bittrex, a cryptocurrency exchange based in Washington State, has been fined a combined $53 million over failures to comply with anti-money-laundering and Bank Secrecy Act rules. The company was fined $24 million by the Office of Foreign Assets Control and $29 million by the Financial Crimes Enforcement Network.
OFAC said that while Bittrex was aware of the office's policies and procedures since at least 2015, including knowledge that OFAC generally prohibits U.S. persons from engaging in activity with sanctioned jurisdictions, it had no internal controls in place until October 2017 to screen customers or transactions for a nexus to sanctioned jurisdictions. Bittrex did not, for example, screen IP address information that indicated the customer was in a sanctioned location or physical address information provided by the customer, such as an Iranian passport for a customer who self-identified at account opening as being in Iran. OFAC cited 116,421 apparent violations of multiple sanctions programs between 2014 and 2017.
Bittrex also failed to prevent people apparently located in the Crimea region of Ukraine, Cuba, Iran, Sudan and Syria from using its platform to engage in approximately $263,451,600 worth of virtual currency-related transactions.
FinCEN, meanwhile, said the company failed to maintain an effective anti-money-laundering program. It said there were failures to implement effective transaction monitoring on its trading platform, relying on as few as two employees with minimal anti-money-laundering training and experience to manually review all of the transactions for suspicious activity, which at times were over 20,000 per day. Overall, said FinCEN, Bittrex conducted over 116,000 transactions valued at over $260 million with entities and individuals located in jurisdictions subject to comprehensive OFAC sanctions.
Further, said FinCEN, Bittrex failed to file any suspicious activity reports between February 2014 and May 2017, and also failed to file SARs on a significant number of transactions involving sanctioned jurisdictions, including the processing of over 200 transactions that involved $140,000 worth of virtual assets — nearly 100 times larger than the average withdrawal or deposit on the Bittrex platform — and 22 transactions involving over $1 million worth of virtual assets.
This is OFAC's largest virtual currency enforcement action to date. It also represents the first parallel enforcement actions by FinCEN and OFAC in this space.
"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 a statement. "Virtual currency exchanges operating worldwide should understand both who — and where — their customers are."
