Does OFAC require KYC for crypto transactions?
OFAC does not mandate KYC by name, but effective sanctions screening requires knowing your counterparty, so KYC is the practical prerequisite.
TL;DR
TL;DR: OFAC does not require KYC by name, but effective sanctions screening requires knowing who your counterparty is. KYC is the practical prerequisite for OFAC compliance.
What OFAC actually requires
OFAC rules do not list a specific "know your customer" procedure. What they do require is that US persons not engage in transactions with parties on the Specially Designated Nationals and Blocked Persons List. To know whether a counterparty is on that list, you first have to know who they are, which is exactly what KYC provides. Without it, screening is guesswork.
How KYC and OFAC screening combine
KYC establishes identity; OFAC screening determines whether that identity is sanctioned. Run both in sequence. sanctionsai.dev screens a wallet or name against 947 OFAC-listed crypto wallets and 19,218 SDN names in one HTTP call under 100 ms, returning clean (ALLOW) or flagged (BLOCK). Strict liability applies to violations, with penalties starting at over $350,000, so an unknown counterparty is not a shield.
Practical takeaways
- Collect identity where you can, even if OFAC does not mandate it.
- Screen the wallet address as a minimum when identity is unavailable.
- Document the identity and the screening result together for the record.
OFAC asks you to know the list; KYC is how you know the person.
For crypto, the wallet address itself is often the best available identifier, so screening it is the fallback when full identity data is missing.