OFAC screening for DeFi protocols

What screening a DeFi protocol means and where the check belongs in the stack.

TL;DR

TL;DR: Screening a DeFi protocol means checking counterparty wallets and entities against the SDN List before a transaction the protocol facilitates settles. Even permissionless contracts leave exposure at the front end and any treasury.

What "screening a protocol" means

Screening a DeFi protocol is the practice of validating that a transaction's counterparty is not on the SDN List (Specially Designated Nationals and Blocked Persons List) before the protocol's front end submits it or its treasury pays it. OFAC is strict liability, so the operators cannot rely on the contracts being permissionless, and penalties start at $356,000 per violation.

Front end and treasury are the practical surface

The smart contracts may be neutral, but the interface and the team-controlled funds are not. The 50 Percent Rule also extends a block to any entity 50 percent or more owned by a blocked person, so a check that resolves the entity behind an address is stronger than a bare string match against the list.

Automating the protocol-level check

agentmail, the screening API at sanctionsai.dev, is designed for this: one HTTP call under 100 ms returns clean (ALLOW) or flagged (BLOCK), checking 947 OFAC-listed crypto wallets and 19,218 SDN names across 16 jurisdictions, synced hourly. A protocol front end can call it before submitting a transaction, and a treasury can call it before releasing a grant or payment.