OFAC Compliance

OFAC Compliance for Your Business

Recently, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has stepped up efforts to ensure organizations are complying with U.S. sanctions and embargoes – and to penalize those who are not.

This has resulted in record fines and penalties totaling more than a billion dollars.  Our team of experts has the knowledge and experience your organization needs to comply with OFAC regulations.

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What OFAC Compliance Means

The U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) is a governmental agency responsible for administering sanctions against targeted foreign governments, individuals, entities and practices.

OFAC is tasked with using the economic force of the United States to help enact foreign policy, anti-proliferation and other goals.

The scope of OFAC rules and regulations includes blocking assets of foreign parties, trade restrictions and controlling financial transactions, among other things.  OFAC has jurisdiction over all U.S. persons and citizens, and foreign entities, which means the scope of this agency’s reach is very far.

Created in 1950, OFAC is part of the U.S. Treasury Department of Terrorism and Financial Intelligence.  The legal basis for OFAC’s jurisdiction and control can be found in the Trading with The Enemy Act (TWEA), International Emergency Economic Powers Act (IEEPA), the Foreign Asset Control Regulations 31 CFR Part 500, as well as other statutes, laws and executive orders surrounding countries such as Iran, Cuba, Russia, Venezuela and more.

Recently, a number of very large and public violations have caused many organizations to take a second look at their sanctions/embargo compliance, and to implement programs to help adhere to OFAC regulations.

Depending on the nature of the violation, as well as other factors such as the country and/or industry involved, OFAC penalties can be as high as $1 million per violation for corporations, and up to $250,000 per violation and/or 20 years imprisonment for individuals.

In addition to these steep penalties, there is also the possibility of negative publicity and loss of international business.  For these reasons, companies are paying attention to OFAC compliance more than ever before.

Export compliance does not only apply to big companies, and any U.S. business that sends products, services or technology/technical data to foreign countries are subject to export control regulations.

Regardless of what you export to other countries, you need a compliance program that ensures you are compliant in all areas of your business to prevent export violations.

What Does OFAC Compliance Mean for Your Company?

OFAC’s sanctions and embargoes programs are comprehensive and complex.  The sanctions are designed to keep you away from certain countries, companies, individuals and/or practices.

Due to their far reach, any corporation that does business internationally should evaluate its practices and develop plans to ensure compliance with these rules.

Companies will need a restricted parties screening program to ensure they are not violating any of these sanctions.   However, screening is just a first step and screening alone does not solve your problems.

Organizations should develop comprehensive policies and procedures, train personnel, monitor/audit compliance, and report violations.

OFAC has published a detailed framework outlining its expectations for a company’s compliance program – so ignorance is not an excuse!  It is also worth noting that not one size fits all.  Each company should evaluate its risk and tailor compliance measures to mitigate those risks.

Regardless of how you address these regulations, some common elements that OFAC expects from every compliance program include:

  • Management Commitment – Demonstrating that top leaders from your organization understand the sanctions programs, and that they have implemented plans to comply and adequate resources (including personnel) to meet these goals.
  • Risk Assessment – To identify your organization’s high-risk transactions, customers and regions of the world.
  • Internal Controls – Designed to identify, evaluate and stop violations from occurring.
  • Testing and Auditing – To ensure that your compliance program is working effectively to mitigate risk and report issues.
  • Training – Making sure that your personnel are sufficiently resourced and trained to comply with OFAC regulations.
  • Mitigation of Penalties – To include voluntary disclosures, cooperation with U.S. governmental agencies, remedial compliance plans and improvements when issues are uncovered.

The U.S. sanctions and embargo programs change frequently with shifting U.S. foreign policy and other goals.  For this reason, it’s highly recommended to have an expert reviewing OFAC’s websites and other publications to ensure the latest information is being applied to your organization.

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How Can We Help Improve Your OFAC Compliance?

For more than 10 years, Export Solutions has specialized in helping organizations of all sizes comply with U.S. and international export control regulations – including OFAC rules.

Our team of specialists approaches each client by understanding your business and creating practical approaches to mitigate your risk.  Some of the ways we can help your company include:

  • Evaluate current sanctions/embargoes policies and procedures and improve where needed
  • Train your teams on the complicated rules of OFAC compliance, including beneficial ownership screening, trade restrictions, blocked assets and financial transactions
  • Assist you with implementing your own software screening tool
  • Analyze your sales activities and customer base to identify risks
  • Perform complex restricted party screens with analysis and recommendations
  • We understand the detailed OFAC sanctions programs, including the “50% Rule,” the “33% Rule,” Sectoral Sanctions Directives, and more
  • If necessary, we can help your organization submit Voluntary Disclosures to OFAC and implement remedial plans to improve your program and mitigate penalties

As the saying goes, “the best defense is a good offense.”  It’s important to act now to understand your risk and develop a plan for OFAC compliance that makes sense for your organization.