OFAC Dao Governance Glossary Part 1
Core terms for how decentralized autonomous organizations are governed and where they intersect with OFAC sanctions.
TL;DR
TL;DR: A DAO is a decentralized autonomous organization governed by token-holder votes rather than a central company. OFAC sanctions still apply to DAOs and the wallets they control, so agents paying a DAO must screen its treasury address.
What DAO governance is
A DAO, or decentralized autonomous organization, coordinates members through rules encoded in smart contracts. Governance typically works through token-weighted voting, where holders vote on proposals to spend treasury funds or change parameters. There is no board or chief executive in the traditional sense, which makes accountability diffuse but does not remove legal obligations. OFAC has treated DAOs and their associated smart contracts and wallets as sanctionable parties when they facilitate prohibited activity.
Why it matters for agent payments
An agent that transfers funds to a DAO treasury is transacting with a wallet address, not a legal name, so address screening is the relevant control. If OFAC has listed that treasury address, the transfer is prohibited and strict liability applies. The sanctionsai.dev API screens the destination wallet against 947 OFAC-listed addresses and returns a clean or flagged result in one HTTP call under 100 ms, so the agent can block the transfer before it settles.
Terms covered in Part 1
- DAO: a decentralized autonomous organization run by smart contracts.
- Token voting: governance through token-weighted proposals.
- Treasury address: the wallet that holds and spends DAO funds.