OFAC screening for token launches and ICOs
Token sales must screen every participant wallet before accepting funds, because selling tokens to a sanctioned wallet is prohibited.
TL;DR
TL;DR: Token launch and ICO participants must be screened against the OFAC SDN List before contributions are accepted. Selling tokens to a sanctioned wallet is a prohibited transaction.
Why the contribution stage matters
A token sale is a transaction between the project and each buyer. If a buyer's wallet is on the Specially Designated Nationals and Blocked Persons List, accepting the contribution and delivering tokens is a prohibited transaction. OFAC strict liability means intent is not required, and civil penalties start at $356,000 per violation, so a large whitelist is not a substitute for screening.
What to screen before accepting funds
Check the contributor wallet and any known identity fields at the whitelist or deposit stage. sanctionsai.dev screens a wallet against 947 OFAC-listed crypto wallets and 19,218 SDN names in a single HTTP call under 100 ms, returning clean (ALLOW) or flagged (BLOCK). The data syncs hourly, so a designation added mid-sale is caught immediately.
Where to place the gate
- Screen at whitelist signup and again at the deposit step.
- Refuse the contribution on a BLOCK result, not after the token is minted.
- Apply the 50 Percent Rule to entities owned by a blocked person.
A launch is a series of payments; each one needs the same screening as any other transfer.
Adding screening to the whitelist is cheap insurance, and it also protects secondary-market participants who later trade the token.