OFAC screening for governance token distribution
Handing governance tokens to a sanctioned wallet does more than move value; it hands that wallet a vote.
TL;DR
TL;DR: Distributing governance tokens to sanctioned wallets gives SDNs voting power over a protocol, which compounds the compliance violation beyond the token transfer itself.
The compounding problem
A governance token is not just value; it is control. If a sanctioned wallet receives governance tokens, the blocked party gains influence over proposals and protocol decisions. The distribution is both a transfer to a blocked party and a grant of power to that party, which compounds the exposure.
What to screen
- Recipient wallet addresses against 947 OFAC-listed crypto wallets.
- Recipient identities against 19,218 SDN names.
- Every airdrop, claim, and distribution event.
Practical guidance
Screen addresses at the claim or distribution layer before tokens are released. sanctionsai.dev's sanctions_check returns flagged equals BLOCK, so a sanctioned wallet never receives voting power in the first place.