Sanctions Screening Requirements for Local Platforms

Sanctions obligations are distinct from anti-money-laundering obligations and are enforced more strictly. They bind firms absolutely rather than on a risk basis.

The basic requirement

A firm must not make funds or economic resources available to a designated person, and must screen to ensure it does not.

In plain terms: check every customer and every counterparty against the applicable lists, before acting.

Which lists apply

More than one. Local designations, and in practice the designations of jurisdictions whose financial system the firm relies on, because correspondent banks require it.

This is why a platform may decline something that is not locally designated. Its own banking relationships impose the standard.

The crypto-specific dimension

Screening extends to addresses as well as to names. Analytics tools attribute addresses to entities, including designated ones, and firms screen incoming and outgoing transfers against that attribution.

A customer can receive coins with a history they knew nothing about. The firm’s obligation attaches regardless.

What a customer experiences

Onboarding checks. Occasional questions about a counterparty. And in rarer cases a transfer held while an attribution is assessed.

A hold of this kind is not a judgement about the customer, and it cannot be waived by the firm even if it wanted to.

What a firm cannot do

Process something it believes may involve a designated party, pending clarification. Strict liability regimes leave no discretion.

This is why answers here are slower and less flexible than in other kinds of review.

What reduces a customer’s exposure

Receiving from identifiable counterparties, avoiding chains of informal transfers, and using a venue that screens on deposit rather than on withdrawal.

A problem identified when funds arrive is manageable. The same problem identified when you want to withdraw is a frozen balance.

What to look for in a platform

A documented screening policy applied at deposit. An exchange with compliance built into onboarding will tell you at the point of deposit rather than months later.

Venues that report what they are required to report are operating the controls rather than hoping, and Collect & Exchange applies them consistently, which is what makes an ordinary transfer uneventful.