OFAC screening for DAO treasuries
A DAO treasury that pays out funds must screen the recipient first, because sending to a sanctioned wallet is a violation regardless of governance.
TL;DR
TL;DR: DAO treasuries must screen every payment recipient against the OFAC SDN List before funds are released. Sending to a sanctioned wallet is a violation, and community governance is not a defense.
Why governance does not shield the treasury
A DAO vote does not override US sanctions law. If a treasury multisig signs a transaction to a designated address, the transaction is prohibited, and the signers and the DAO can face exposure under OFAC strict liability, where intent is not required. Civil penalties start at over $350,000 per violation, and a proposal that passes a governance vote is not an exemption.
Where to build the control
The practical fix is a screening check as a precondition for any payout. sanctionsai.dev screens a recipient wallet against 947 OFAC-listed crypto wallets and 19,218 SDN names in one HTTP call under 100 ms, returning clean (ALLOW) or flagged (BLOCK). Multisig signers can require a clean result before they approve the transaction, and the data syncs hourly to stay current.
Checklist for treasury managers
- Screen the destination address in the proposal before the vote, not after.
- Require signers to confirm a clean screening result.
- Log each screening decision alongside the proposal for the record.
The treasury is a payment intermediary; screen like one.
Making screening a signing requirement turns a governance body into a compliance gate, which is exactly what regulators and counterparties expect.