UK crypto firms face new risk from delayed wallet attribution

UK-linked crypto businesses now face a new legal risk when funds are later tied to Iran's Islamic Revolutionary Guard Corps. From July 17, the IRGC's designation under Schedule 6A of the National Security Act 2023 means receiving, accepting, or retaining value from the group can bring criminal liability, with penalties of up to 14 years in prison in the most serious cases.

The law does not name crypto, but it covers money or anything of value supplied directly or indirectly, including through companies and intermediaries. That makes on-chain transfers part of the problem for exchanges, custodians, payment firms, stablecoin issuers, OTC desks, merchants, and even UK-linked users. An Iran-linked wallet alone is not enough to prove an offense. Authorities would still need to show a link to the IRGC and that the recipient knew, or reasonably should have known, about it.

The difficult part is timing. Blockchain transfers can settle before a recipient can identify the sender, and wallet attribution may only appear later through new intelligence. In that case, the legal question shifts to what was known when the transfer arrived, when the attribution changed, and what happened to the funds after that.

The IRGC designation is separate from UK sanctions freezes. A stablecoin freeze would still require separate action by an issuer or another legal authority.