FinCEN and OFAC teamed up to issue parallel enforcement actions against crypto exchange Bittrex, Inc. for alleged violations of BSA/AML and OFAC regulations, with penalties of $29 million and $24 million being issues, respectively.
Previously in 2019, NYDFS had rejected Bittrex’s application for a license to operate in New York, finding amount other things that its BSA/AML and OFAC programs were inadequate.
From the FinCEN findings: “FinCEN’s investigation found that, from February 2014 through December 2018, Bittrex failed to maintain an effective AML program. Bittrex’s program failed to appropriately address the risks associated with the products and services it offered, including anonymity-enhanced cryptocurrencies. Bittrex failed 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.”
From OFAC’s findings: :As a result of deficiencies related to Bittrex’s sanctions compliance procedures, Bittrex failed to prevent persons apparently located in the Crimea region of Ukraine, Cuba, Iran,
Sudan, and Syria from using its platform to engage in approximately $263,451,600.13 worth of virtual currency-related transactions. The applicable sanctions programs generally prohibited U.S. persons from engaging in transactions with these jurisdictions. Based on internet protocol address information and physical address information collected about each customer at onboarding, Bittrex had reason to know that these users were in jurisdictions subject to sanctions. At the time of the transactions, however, Bittrex was not screening this customer information for terms associated with sanctioned jurisdictions. The settlement amount reflects OFAC’s determination that Bittrex’s apparent violations were not voluntarily self-disclosed and were not egregious.”
NYDFS license rejection is here: https://www.dfs.ny.gov/system/files/documents/2019/04/dfs-bittrex-letter-41019.pdf
OFAC’s release is here: https://home.treasury.gov/system/files/126/20221011_bittrex.pdf