The UK’s financial sanctions enforcement authority is ramping up efforts to tackle the misuse of digital currencies for sanctions evasion and money laundering. The Office of Financial Sanctions Implementation (OFSI) has published a detailed account of its collaboration with enforcement and regulatory bodies aimed at identifying and disrupting the abuse of cryptoassets.
According to OFSI, criminals and sanctioned entities are increasingly using digital currencies to move illicit funds under the radar. However, UK agencies are now pooling their resources and intelligence to trace these transactions and enforce compliance.
Collaboration
A key development in this crackdown is the Crypto Cell Fusion Cell (CCFC), a multi-agency initiative that includes the National Crime Agency (NCA), Metropolitan Police, HM Revenue & Customs (HMRC), Financial Conduct Authority (FCA), City of London Police, and OFSI.
The OFSI confirmed that it has been sharing detailed intelligence with the CCFC, leading to enforcement actions against UK-based individuals suspected of breaching sanctions using digital assets. Specific names or cases were not disclosed, but the actions signal a more coordinated and data-driven approach to financial enforcement.
Private Sector Role
One of the most notable aspects of this collaboration is the role of Elliptic, a private blockchain analytics company. Working alongside public agencies, Elliptic provided real-time intelligence including:
- Wallet screening and attribution
- Transaction histories
- Risk scoring
- Cross-chain tracing across thousands of digital assets
Elliptic’s “Data Fabric” system allowed UK agencies to track crypto transactions more effectively, helping investigators prioritize high-risk activity and coordinate investigations across agencies.
“Tracing funds from A to B is no longer enough,” Elliptic said. “To be effective, investigators need to move faster, prioritize leads intelligently, and work across agency boundaries.”
Regulatory Background
In August 2022, UK sanctions regulations were updated to classify digital asset service providers as ‘relevant firms’. Since then, these firms have been legally required to report suspected sanctions breaches to the OFSI if they:
- Identify a sanctioned person
- Suspect a transaction breaches sanctions laws
Despite this, the OFSI’s own findings suggest that crypto firms are not fully meeting their reporting obligations.
Threat Assessment
In a digital asset threat assessment published in July 2025, the OFSI highlighted five major conclusions about how digital currencies are being used to evade sanctions:
- Under-reporting: It is “almost certain” that UK-based crypto firms have under-reported potential sanctions breaches since 2022.
- Inadvertent non-compliance: Most non-compliance likely results from delays in attribution or a lack of awareness.
- Exposure to sanctioned platforms: UK firms have likely continued to interact, knowingly or not, with Garantex, a Russian exchange sanctioned in 2023.
- Cyber threats from North Korea: Digital asset platforms in the UK are likely being targeted by DPRK-linked hackers and IT professionals aiming to exploit crypto systems.
- Links to Iranian entities: UK platforms are believed to be involved in transfers to Iranian individuals or institutions connected to sanctioned networks.
A recent Washington Post investigation revealed that Iran’s Islamic Revolutionary Guard Corps (IRGC) used two UK-registered crypto exchanges to transfer over $1 billion since 2023. This revelation may have heightened urgency within UK authorities to act.
Enforcement Message
In its latest statement, OFSI emphasized that cryptoassets are not exempt from sanctions enforcement. The agency said:
“The use of cryptoassets to evade sanctions is treated no differently to the exploitation of traditional currencies.”
It also warned that the OFSI stands ready to investigate and pursue violations involving digital currencies, working closely with law enforcement, government agencies, and private sector partners.
This marks a turning point in how digital assets are treated in the context of national security and financial crime, as the UK’s financial sanctions watchdog positions itself to keep pace with an evolving threat landscape.
FAQs
What is the OFSI doing about crypto misuse?
It is cracking down on crypto used to evade sanctions.
Who is part of the Crypto Cell Fusion Cell?
NCA, HMRC, FCA, police forces, and the OFSI.
What role does Elliptic play?
It provides blockchain analytics to track illicit crypto use.
Are UK crypto firms required to report breaches?
Yes, since August 2022, under updated sanctions laws.
