A news item popped up where the US Treasury was trying to do the right thing by blocking funds to 3 alleged Chinese drug kingpins. The only problem was that these criminals were using BTC and LTC address to receive funds from their clients, so the US Treasury added a bunch of wallet addresses associated with the criminals to a sanctions list.
So what happens to the wallet addresses when they are on this list? Probably the compliant crypto exchanges will blacklist them and prevent the coins from being directly transferred into the exchange wallets. The exchanges that are more lax will probably not bother. Even then, it might be easy enough to circumvent the blacklist by putting the coins through a mixer or transferring them quickly to another wallet and immediately liquidating them on an exchange.
While the sanctions list may not be an effective way to block funds for criminal elements, it will also be an interesting thought exercise to see if there is a more effective way to block funds? If you have any good ideas, please comment below!