OFAC screening for crypto payment processors

Crypto payment processors must screen both the merchant and the customer on every transaction against the SDN List.

TL;DR

TL;DR: A processor that moves crypto for merchants must screen the merchant at onboarding and both the merchant and the customer on every transaction, then block any match.

Two sides, two checks

A payment processor touches both ends of a sale, so both carry risk:

• Merchant: screen the business name and its payout wallet.
• Customer: screen the name and the paying wallet.

Continuous, not one time

Onboarding checks are not enough. The SDN List updates regularly, and a counterparty can be designated after onboarding. Screen every transaction so a newly listed party is caught immediately, because a merchant or customer can become sanctioned after they were first cleared.

Controls

Run checks under 100 ms so authorization stays fast. Apply the 50 Percent Rule to entities majority owned by a blocked person. Log every screen, and block on any match. Because OFAC applies strict liability, a processor that moves funds for a designated party can face penalties starting at $356,000 per violation.

Merchant onboarding is the first gate

Start with the merchant: check the business name, the owners, and the payout wallet before the first payment flows. Then keep screening on every transaction, because a merchant can be designated later. A processor that only screens at onboarding will miss the moment a once-clean merchant becomes sanctioned, which is exactly when the risk materializes. The per-transaction check is what catches a merchant or customer who is designated after they were first approved.