OFAC Compliance

What Is OFAC?

The Office of Foreign Assets Control (OFAC) acts as the intelligence and enforcement arm of the U.S. Department of Treasury. The OFAC plays a vital role in preventing money laundering and keeps a sanctions list of blocked persons and sanctioned countries for national security purposes.

OFAC is tasked with using the United States’ economic force to help enact foreign policy, anti-proliferation, and other goals. OFAC sanctions are listed on the OFAC website, and companies must do their due diligence to avoid business dealings with individuals, organizations, and countries to avoid harsh fines and penalties.

What Is OFAC Compliance?

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.

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.

Recently, several extensive 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.

What Penalties & Fines Result From OFAC Violations?

Depending on the nature of the violation and other factors such as the country and industry involved, OFAC civil penalties can be as high as $1 million per violation for corporations and up to $250,000 per violation and 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 more 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 is 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.

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.

Talk to our team today to learn more about how we can help keep your business safe!