Our team of OFAC sanctions lawyers and economic sanctions attorneys are well-versed in the regulations set forth by the Office of Foreign Assets Control (OFAC) and other international bodies. We assist clients in ensuring compliance with these regulations and effectively represent them in any disputes or enforcement actions.
The Office of Foreign Assets Control (OFAC), a division within the U.S. Department of the Treasury, oversees and enforces U.S. economic sanctions and trade embargoes involving foreign nations and designated individuals. It takes action to advance U.S. national security and foreign policy objectives, drawing its legal authority from various sources, including executive orders, legislation, and international agreements.
OFAC sanctions encompass a dynamic and intricate framework of rules, regulations, and foreign policy shifts. They also involve a continually evolving list of individuals and countries of concern. Any individual, organization, or foreign entity perceived as a threat to U.S. national security, foreign policy, or economic interests may face sanctions. In international business and transactions, compliance with OFAC laws and regulations is paramount. Staying abreast of evolving policies can be challenging, but an experienced OFAC attorney can offer valuable guidance for specific licensing, addressing current foreign activities, and other legal matters.
Initially, it may seem that OFAC primarily addresses significant national security concerns like terrorism and international drug trafficking, making it appear unnecessary for most businesses to concern themselves with OFAC compliance. However, part of OFAC’s responsibility is to scrutinize U.S. companies engaged in international commerce. Consequently, it is vital for any company with overseas customers or suppliers to establish an OFAC compliance program.
The following scenarios necessitate the implementation of an OFAC compliance program:
1. A business routinely interacts with an individual, organization, or nation listed in the OFAC sanctions registry.
2. A business conducts a substantial volume of international transactions.
3. A business undergoes shifts in its customer base due to mergers or acquisitions.
4. A business offers electronic products and services.
5. A business has a history of prior OFAC violations or encounters.
| Type of Sanctions | Description |
|---|---|
| Economic Sanctions | Impose limitations on trade, investment, or financial interactions involving the designated country or entity and other nations or entities. These restrictions may encompass import/export constraints, freezing of assets, and bans on financial transactions. |
| Diplomatic Sanctions | Restrict or sever diplomatic relations between countries. This can encompass actions like expelling diplomats, suspending diplomatic missions, or enforcing travel restrictions on government officials. |
| Military Sanctions | Limit military collaboration, training, or the transfer of weaponry between nations. This may involve measures such as arms embargoes or constraints on the trade of military technology and equipment. |
| Humanitarian Sanctions | Restrict the provision of humanitarian aid or services to the designated country or entity. This may entail constraints on the supply of medical resources, food, or other forms of humanitarian assistance. |
| Personal Sanctions | Targeted sanctions are directed at specific individuals, such as government officials, and may include travel bans, asset freezes, and other restrictions. They are also known as “targeted sanctions”. |
| Comprehensive Sanctions | Target an entire country or organization and may include several types of sanctions. As a rule, this is the most severe form of sanctions, which can have a significant impact on the economy and population of the country or organization targeted. |
OFAC administers four major categories of economic sanctions. Each category includes numerous specific sanctions that American financial institutions and businesses must adhere to. Oberheiden P.C. assists these institutions and businesses in identifying relevant sanctions, ensuring compliance, and provides legal defense in OFAC enforcement actions across all four categories.
The economic sanctions managed by OFAC include:
OFAC enforces economic sanctions against 18 countries, restricting or prohibiting trade. These sanctions may target entire nations or specific transaction types or market sectors. Current country-specific sanctions cover:
– Afghanistan
– Belarus
– Burma
– Chinese Military Companies
– Cuba
– Ethiopia
– Hong Kong
– Iran
– Nicaragua
– North Korea
– Russia (including Global Magnitsky and Russian Harmful Foreign Activities Sanctions)
– Somalia
– Sudan, Darfur, and South Sudan
– Syria
– Ukraine/Russia
– Venezuela
OFAC often issues general licenses allowing certain economic activities in these countries. For a successful defense against alleged violations, proof of transaction alignment with a specific general license is typically necessary.
These sanctions target specific threats rather than countries. They encompass:
– Counterterrorism
– Cyber-related activities
– Genocide and Human Rights Abuse
– Transnational Organized Crime
– Weapons Proliferation
Targeting specific individuals, businesses, and entities designated as Specially Designated Nationals or Blocked Persons (SDNs), these sanctions block assets and prohibit dealings with them by U.S. persons.
These sanctions target specific trade sectors within certain countries, not individual nations or entities. A notable example is the sector-based sanctions related to Ukraine, especially following Russia’s annexation of Crimea and the ongoing conflict.
These sanctions penalize entities that associate or conduct business with SDNs. Though relatively new and limited in number, the recent implementation of secondary sanctions indicates potential expansion of this program.
OFAC administers multiple economic sanctions programs aimed at regulating and often preventing commercial and financial dealings with foreign entities and individuals. U.S. banks and domestic entities must consistently adhere to these sanctions, whether it involves abstaining from prohibited transactions or conducting restricted transactions under a general or specific OFAC license.
Violations of OFAC’s economic sanctions can lead to severe repercussions, including asset freezes, federal investigations, and, in many cases, potential criminal prosecution for U.S. banks and businesses. Consequently, all U.S. entities engaged in cross-border transactions affected by OFAC sanctions must prioritize compliance. They should also be prepared to mount an effective defense if accused of violating OFAC’s economic sanctions.
When facing OFAC enforcement actions, a crucial initial step is pinpointing the specific sanctions that your business or financial institution is alleged to have breached. Within OFAC’s economic sanctions programs, there are numerous individual sanctions, each carrying its own set of prohibitions, exceptions, and exemptions. To mount a successful OFAC economic sanctions defense, identifying the relevant sanction(s) is imperative, as it determines the available defenses.
