OFAC screening for staking rewards

A validator that pays staking rewards to a sanctioned wallet is sending value to a blocked party.

TL;DR

TL;DR: Staking rewards distributed to wallet addresses must be screened. A validator paying rewards to a sanctioned wallet may carry compliance exposure even though the validator did not choose the delegator.

Why validators are exposed

Delegators choose their validators, and rewards flow automatically to the delegator's wallet. The validator is the party making the payment. Because OFAC uses strict liability, the validator's lack of intent to pay a blocked party is not a defense.

What to screen

• Delegator wallet addresses against 947 OFAC-listed crypto wallets.
• Delegator identities against 19,218 SDN names.
• Periodically, because lists update hourly.

Practical controls

Screen delegator addresses at each reward distribution and re-screen as sanctionsai.dev refreshes its data. A flagged result should BLOCK the reward rather than route value to a sanctioned wallet.