Pub. 12 2021 Issue 4

Pub. 12 2021 I Issue 4 Winter 27 West Virginia Banker (“KYC”) procedures, and transaction monitoring and investigation to identify virtual currency addresses and other data associated with sanctioned individuals, entities, or jurisdictions. OFAC includes virtual currency addresses as identifying information for designated persons, so these should be used in screening as well. While OFAC does not require the virtual currency industry to use any particular in-house or third-party software, OFAC states that such software can be a helpful tool for an effective sanctions compliance program. Testing and Auditing Testing and auditing procedures can include ensuring that screening and IP blocking are working effectively. Companies that incorporate a comprehensive, independent, and objective testing or audit function within their sanctions compliance program are equipped to ensure that they are aware of how their programs are performing and what aspects need to be updated, enhanced, or recalibrated to account for a changing risk assessment or sanctions environment. The size and sophistication of a company may determine whether it conducts internal and external audits of its sanctions compliance program. Some best practices for testing and audit procedures in sanctions compliance programs for the virtual currency industry include sanctions list screening, keyword screening, IP blocking, investigation and reporting. Training Companies should conduct training for relevant employees at least annually. The best practices for the virtual currency industry are not new, nor are they unique to the industry. However, the recent guidance from OFAC indicates that the industry will be a particular focus for enforcement. Companies in the industry should implement these measures as soon as possible if they have not already. The scope of a company’s training will be informed by the size, sophistication, and risk profile. OFAC training should be provided to all appropriate employees, including compliance, management, and customer service personnel, and should be conducted periodically and, at a minimum, annually. A well-developed OFAC training program will provide job- specific knowledge based on need, communicate the sanctions compliance responsibilities for each employee, and hold employees accountable for meeting training requirements through the use of assessments. Remedial measures Where a sanctions violation has occurred, OFAC can consider the remedial measures a company has taken as a mitigating factor in a penalty determination. Remedial measures can include adding and/or strengthening the tools listed above to fill gaps and repair weaknesses in the compliance program. Conclusion OFAC is placing much greater scrutiny on the virtual currency industry. Industry members should be mindful of implementing and maintaining robust compliance measures early and often.  Roger Morris serves Compliance Alliance as Associate General Counsel. He brings a combination of unique experiences to C/A that he uses to provide guidance on a wide variety of regulatory and compliance issues. Contact him at Bankers Alliance, (833) 683-0701 or info@bankersalliance.org . Companies should conduct training for relevant employees at least annually. The best practices for the virtual currency industry are not new, nor are they unique to the industry.