Crypto companies in the U.K. have almost certainly been under-reporting breaches of financial sanctions since as far back as 2022, the Office of Financial Sanctions Implementation (OFSI) said in a Monday report, as the nation imposed more sanctions on Russia.
The report, which is a sanctions threat assessment focused entirely on crypto, said most of the non-compliance by U.K. crypto firms was likely to be inadvertent and resulted from exposure to a named, or designated, person. Exposure could be both direct, in which there is a clear link to the person’s wallet address, or indirect, where the crypto’s origin has been obscured.
Crypto firms have been obligated to report to OFSI when they suspect a breach of sanctions since August 2022. Since January 2022, over 7% of all suspected breaches reported to OFSI have involved crypto-asset firms, the report said. OFSI was established in 2016 to ensure sanctions are enforced.
There are currently 55 crypto firms registered with the Financial Conduct Authority as part of the country’s anti-money laundering regulations. The report didn’t say how many of the companies had filed reports with OFSI.
After the invasion of Ukraine in February 2022, many countries imposed financial sanctions on Russia, and concerns arose that crypto was being used to circumvent restrictions. The U.K., U.S. and European Union have made it clear that sanction rules extend to crypto.
The report also detailed that U.K. crypto firms face a high risk of being targeted by North Korean hackers, many of which operate on behalf of sanctioned entities.