By Robert Kim
November 4, 2022
The misuse of virtual assets, combating cyber threats, and effective implementation of sanctions against Russia are leading sanctions priorities for the U.S. and U.K., according to a recent announcement on enhancing bilateral partnership.
On October 17, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and HM Treasury’s Office of Financial Sanctions Implementation (OFSI) announced deeper cooperation on sanctions implementation and enforcement, building on experience working together before and during Russia’s invasion of Ukraine.
OFAC and OFSI declared that their long-term goals are to align sanctions implementation and better assist industry through joint products and the provision of guidance.
Virtual Assets and Cyber Threats
Cyber threats and misuse of virtual assets were specified as shared sanctions priorities for OFAC and OFSI. These problems have been the subjects of increasing U.S. attention in recent years. OFAC designated Monero privacy coin addresses linked to Russian cybercriminals in 2020, then sanctioned the cryptocurrency mixing services Blender.io and Tornado Cash in 2022, primarily for their use in North Korean cybercrime.
After OFAC sanctioned Tornado Cash in August of this year, described in an August Kharon report, Dutch authorities arrested the CEO of the company that created the virtual currency mixer, whose three principals resided in the U.S., Netherlands, and Russia.
Recent Sanctions Coordination
The announcement continues a movement toward multilateral cooperation between sanctions authorities that began before the war in Ukraine. In 2020, the U.S., U.K., and EU sanctioned officials of the regime of Belarusian President Alyaksandr Lukashenka following election fraud and crackdowns against protestors, then declared coordinated sanctions in response to the arrest of a Belarusian journalist in June 2021. Later that year, the U.S. Department of the Treasury’s 2021 Sanctions Review called for multilateral coordination of sanctions to magnify their economic and political impact.
The sanctions imposed in 2022 to counter Russia’s invasion of Ukraine have been a multilateral effort in which the U.S. and its allies “are regularly sharing information through a variety of channels, so all our allies and partners can take action under their own authorities,” as Deputy Secretary of the Treasury Wally Adeyemo stated on October 14.
Ongoing Global Sanctions Enforcement
In recent weeks, the U.S. and U.K. governments have announced new sanctions addressing a range of issues outside of Russia. OFAC and OFSI each designated leaders of Iran’s government and security apparatus for the shutdown of Iran’s Internet access and violence against peaceful protests after the death of Mahsa Amini. In October, the agencies also acted separately on issues with overlapping U.S. and U.K. sanctions authorities, including:
- An OFAC designation of two individuals and a business in Bosnia and Herzegovina for corruption and undermining democracy in the Western Balkans
- An OFSI designation of the commander of the Houthi air force and air defense forces in Yemen for supporting Houthi military efforts
- An OFAC designation of three individuals and an entity in Burma for trafficking weapons and other supplies for the military regime
- An OFAC designation of a sanctions evasion network based in Singapore, Taiwan, and the Marshall Islands that exported petroleum to North Korea in violation of U.N. sanctions