One On-Chain Transfer Could Lead to 14 Years in Prison? UK Crypto Compliance Faces New Risks
A blockchain transfer could now lead to a 14-year prison sentence in the UK, following the designation of Iran's Islamic Revolutionary Guard Corps (IRGC) under the National Security Act 2023. A new criminal offense (Section 17C) makes it illegal for UK-linked persons or entities to obtain, receive, or retain any valuable benefit if they know, or should reasonably know, it originates from a designated entity like the IRGC. This applies broadly to crypto assets and on-chain transfers.
The key challenge lies in timing and knowledge. A transfer can settle on-chain before the recipient identifies the sending wallet, and wallet attribution to a sanctioned entity may only occur post-transaction. Liability depends on what the recipient knew about the source of funds and when they knew it. The offense follows the value, not the payment path, and can involve indirect provision through intermediaries.
While the designation itself doesn't trigger automatic asset freezes under UK sanctions law, it creates a separate criminal risk. For UK crypto exchanges, custodians, payment firms, and even users, this makes maintaining clear records of wallet attribution, transaction timelines, and subsequent actions critical for evidence. The law does not impose new reporting duties but emphasizes using existing suspicious activity reporting and consent processes. The lack of ability to reject on-chain transactions makes documented internal controls and decision-making timelines vital for legal defense.
marsbit07/20 08:26
