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Uphold HQ Settles OFAC Violations for $72,230

Uphold is a California-based money service business.  Uphold agreed to pay OFAC $72,230 to resolve multiple sanctions program violations.

Between March 2017 and Maay 2022, Uphold and its affiliates processed 152 transactions totaling $180,5765 in violation of the Iran, Cuba and Venezuela sanctions programs.  The customers involved in the illegal transactions self-identified as being located in Cuba or Iran and for employees of the Venezuela Government.

Uphold voluntarily disclosed the violations.

Uphold is a global digital trading platform founded in 2014 and based in the U.S. Customers can move, convert and hold currency (traditional and virtual) or commodities to enable foreign exchange and cross-border remittances.

Iran and Cuba Violations

Uphold and its affiliates onboarded customers who provided information indicating they were located in Iran or Cuba.  Customers selected non-sanctioned jurisdictions in the drop-down menu but provided addresses in Iran or Cuba in the free text portion of the onboarding form.  Uphold did not screen the addresses listed in the free text field.

On other occasions, customers provided an identification document from a sanctions jurisdiction but Uphold failed to screen or flag such documentation.

As a result of these omissions, Uphold processed 53 transactions for customers in Iran and 25 transactions for customers in Cuba. In addition, Uphold processed 16 transactions with an Iranian virtual currency exchange.

Venezuela Violations

Between August 9, 2019 and October 19, 2023, Uphold processed 58 transactions totaling $1.316 million for two customers who were PDVSA employees.  In the Fall of 2021, Uphold started to collect enhanced due diligence information which included employment information for certain customers.  Uphold delayed using this information to ensure compliance with the Venezuela sanctions. 

Analysis of Penalty Factors

Uphold failed to exercise due caution or care when it onboarded or conducted diligence of its customers, despite the fact that the customers self-identified themselves as being located in a sanctioned jurisdiction or an employee of the Venezuelan Government.  As a result, Uphold had reason to know its was processing payments on behalf of persons located in Iran and Cuba, and employees of the Venezuelan Government.

Uphold cooperated with OFAC’s investigation and entered into a tolling agreement. To remediate the violations, Uphold undertook a number of measures, including: suspension of account access to all of the customers described above; implementation of an information technology solution to screen customer information provided in free text fields and identification documents; weekly quality assurance systems; independent testing of screening systems; implementation of automatic restrictions applicable to users who attempt to send transfers to beneficiaries in sanctioned jurisdictions; real-time virtual currency wallet address screening; additional and enhanced sanctions training to all staff; increased compliance department resources in line with growth of the business; and implementation of periodic sanctions risk assessments.

According to OFAC, the Uphold “case underscores the importance of financial institutions—including those that provide services related to virtual and traditional currencies—maintaining robust controls to screen information provided by customers to identify sanctions risks. In particular, information provided by customers during the account opening and diligence processes, such as identification and location information, should be considered for screening. Financial institutions should also consider ways to address the potential for customers to circumvent such screening controls.”

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