OFAC screening for crypto debit cards

Crypto debit cards that convert crypto to fiat at the point of sale must screen each transaction against the SDN List.

TL;DR

TL;DR: A crypto debit card converts crypto to fiat on every purchase, so the issuer must screen each transaction and the cardholder against the SDN List before settling.

Why cards carry risk

A crypto debit card turns crypto into spendable fiat in real time. That conversion is a value transfer, and the issuer is the control point. OFAC applies strict liability, so intent is not required for a violation. Every swipe is, in effect, a crypto-to-fiat payment the issuer must vouch for.

What to screen

• Cardholder: check the name at onboarding and on spend.
• Wallet: check the funding wallet against listed crypto wallets.
• Merchant: screen the receiving merchant where data is available.

Controls

Screen each authorization under 100 ms so the card feels instant at checkout. Log every screen, and decline the transaction on any match. Apply the 50 Percent Rule to majority owned entities, and use a live SDN list synced hourly so newly designated parties are caught immediately.

The authorization is the gate

The card authorization is the natural place to screen, because it happens on every purchase and completes in milliseconds. Run the check there, and decline on any match before the fiat leaves the issuer. Logging each authorization gives a complete record of every conversion the card performed, which is the evidence a regulator would ask for. A complete authorization log is also what lets the issuer answer questions about any single transaction after the fact.