Chainalysis launches free sanction screening tools
The US, UK, Canada and the EU have all placed sanctions on Russia
Chainalysis, the blockchain data platform has announced the launch of two sanction screening tools for the crypto industry, that are free to use.
One that was made available from 10 March is the on-chain oracle which is a smart contract which targets decentralised finance (DeFi) projects. The on-chain oracle validates whether a cryptocurrency wallet address has been included in the sanction list.
The second sanction screening tool that will be released in April is an application programming interface (API). An API uses the same data as the on-chain oracle to examine if a wallet is included on any sanction list, however, it goes one step further as it can also be used on centralised crypto exchanges and mobile user interfaces.
The US, UK, Canada and the European Union (EU) have all placed sanctions on Russia following its invasion of Ukraine. As well as major Russian banks being blocked from using SWIFT, the international payment system.
Due to this decentralised exchanges (DEXs), decentralised finance (DeFi) platforms, decentralised autonomous organisations (DAOs) and decentralised applications (DApps) developers have been searching for ways to assist themselves and their customers to comply with sanction lists. As Chainalysis explains “these tools will enable users to easily validate they are not interacting with cryptocurrency wallets associated with sanctioned entities.”
The transparency of blockchain
Chainalysis believes “given the transparency of blockchains, it would be difficult for the Russian government or financial elite to systematically evade sanctions at scale through cryptocurrency without detection.” Still, the company is anticipating that some sanctioned Russians actors may use cryptos to evade sanctions.
As transactions are permanently recorded on the blockchain it provides opportunities to identify and shut down sanction evasion tactics. Crypto compliance professionals with the right data and technology can effectively identify transactions by sanctioned entities.
However, the “Chainalysis oracle and API will provide any cryptocurrency business, protocol, or organisation a simple way to quickly check if an address is on a sanctions list before allowing it to connect with their service.”
“Conduct basic sanctions screening”
Michael Gronager, co-founder and CEO, Chainalysis said: “Now is the time for the industry to demonstrate that blockchains' inherent transparency make cryptocurrency a powerful deterrent to sanctions evasion. In anticipation of ongoing sanctions, we've prioritised the development of these tools so that all cryptocurrency market participants have what they need to harness this transparency and conduct basic sanctions screening at no cost to them.”