UK Regulator Flags Crypto Firms for Under-Reporting Sanction Breaches

The UK's Office of Financial Sanctions Implementation (OFSI) has identified significant under-reporting of sanction violations by cryptocurrency firms since 2022. Nearly 7% of all suspected breaches reported to OFSI involved digital asset companies, though regulators believe most non-compliance stems from inadvertent exposure to sanctioned entities rather than deliberate evasion.

Since Russia's invasion of Ukraine, Western nations have explicitly extended financial sanctions to cryptocurrency transactions. The UK currently lists 55 crypto firms registered under its anti-money laundering framework, though OFSI's report didn't disclose how many complied with mandatory breach reporting requirements implemented in August 2022.

Both direct wallet connections and obscured transaction origins pose compliance challenges for the sector. The findings underscore growing regulatory scrutiny as governments worldwide tighten oversight of crypto's role in international finance.