Sanctions screening

Sanctions screening is the process of checking the people, entities, and - in crypto - wallet addresses you deal with against government sanctions lists, to make sure you are not transacting with someone you are legally forbidden to touch. It is a mandatory part of any serious anti-money-laundering and onboarding process.

In the US, the key authority is OFAC, the Office of Foreign Assets Control, which maintains the Specially Designated Nationals (SDN) list along with country and sectoral sanctions programs. OFAC sanctions apply to US persons on a strict-liability basis - meaning you can violate them even without intending to, which is why screening has to be systematic rather than a judgment call.

In practice, screening happens at two moments:

• At onboarding - alongside KYC, checking the customer's identity (and, for entities, their beneficial owners) against the lists.
• On an ongoing basis - because lists change and existing customers can become sanctioned.

Crypto raises a distinct wrinkle: OFAC has added specific blockchain wallet addresses to the SDN list, and it even sanctioned the Tornado Cash mixer (a designation later subject to legal challenge). So token platforms screen not just identities but the wallets interacting with their contracts.

Sanctions screening also underpins blocking a restricted jurisdiction. The lists and their legal status change frequently, so screening tools and policies need to stay current.

Source: U.S. Treasury OFAC (ofac.treasury.gov), as of 2026.