An Overview of OFAC
The Office of Foreign Assets Control (OFAC) of the United States Treasury Department has primary responsibility for administering economic sanctions imposed by the U.S. against countries, groups and individuals. While its restrictions are primarily financial, OFAC governs all aspects of business with proscribed parties. OFAC’s regulations have what may appear to be a surprisingly long reach, with extraterritorial application to parties domiciled outside the United States as well as activities of U.S. citizens and permanent resident aliens located abroad. The scope of OFAC’s programs varies considerably, with some directed only at named parties and others at all trade transactions with a country. For the most part the sanctions apply only to “U.S. persons”, meaning U.S. citizens and permanent resident aliens, business enterprises formed under U.S. law and foreign branches. Foreign persons are subject to restrictions on exports and reexports of U.S.-origin merchandise and, in the cases of Cuba and Iran, foreign affiliates of U.S. companies are subject to the same restrictions as U.S. persons. They may, however, get caught by the regulations through use of the United States financial system or other activities permitting OFAC to assert jurisdiction over them.
Violators of the regulations face severe penalties. Recent settlements involve PayPal, which was penalized $7,658,300, Commerzbank, assessed $258,660,796 and BNP Paribas S.A., which settled multiple agency proceedings for $8,900,000,000, including $963,000,000 for breaching OFAC regulations. Although level of culpability plays a role in the amount of the penalty, violations arising from inadvertence may be severely penalized as well, even if self-disclosed. In addition, the Commerce Department considers certain violations of OFAC requirements to constitute violations of its Export Administration Regulations.
Legal Assistance with Office of Foreign Assets Control Sanctions Regulations
For nearly two decades, I have assisted United States and foreign companies in understanding OFAC’s rules and taking effective compliance measures. Among the recurring issues I have addressed are identification of prohibited and permissible activities, whether and under what circumstances trade involving U.S.-origin items is authorized between a third country and sanctioned entity, “facilitation” prohibitions applicable to U.S. companies and U.S. citizens or permanent resident aliens employed abroad and preparation of licenses to obtain OFAC approval of otherwise-prohibited activities. My recent work includes counseling on the relaxation of sanctions on Cuba, the mix of expanded and reduced sanctions on Iran and the multiple set of Russia/Ukraine restrictions.
Get expert guidance with OFAC by using the form below, or call me at 202-772-2039.