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| Summer 2011 / Volume CXII No. 3 |
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OFAC EnforcementThe Office of Foreign Assets Control (OFAC) administers and enforces U.S. economic sanctions programs against countries, individuals, and entities, such as terrorists and narcotics traffickers. The purpose of the sanctions is to accomplish U.S. foreign policy and national security goals. All U.S. persons and companies, regardless of the volume of business that they do or any other factor, are prohibited from entering into transactions with countries or entities that are the subjects of economic sanctions programs.
Judging by the number of recent settlements, OFAC has stepped up its enforcement efforts involving these sanctions programs, reaching more than $1 billion in recoveries in 2009 and 2010. These include a $25,000 civil penalty assessed against a company that initiated a funds transfer to a Burmese bank to pay for the purchase of pearls, contrary to regulations that prohibit such transfers to Burma. In reaching the final penalty amount, OFAC considered several factors pursuant to its Guidelines, including that: it was the company’s first violation; the company cooperated with OFAC; and, the company terminated its business transactions with Burma.
Although not relevant in the case described above, OFAC will consider other factors in assessing a penalty, including the “existence, nature and adequacy” of a company’s OFAC compliance program. Thus, a robust and meaningful compliance program will not only help prevent a prohibited transaction, but will also be considered by OFAC in assessing a penalty should such a transaction unfortunately occur. The basics of a program should include:
- A written policy stating that compliance with the law is mandatory.
- The designation of an appropriately knowledgeable employee to coordinate the OFAC program.
- A description of how customer screenings will be accomplished to avoid prohibited transactions. This will include checking lists maintained by OFAC, including the Specially Designated Nationals list (SDN list) and lists of embargoes. (Links to these, and other, lists are available on the JVC website here).
- Written policies that describe the type of transactions that must be screened, how to perform the screening, and what to do if a customer name matches an entity on the SDN, or other, list.
- Procedures for documenting that screenings were performed.
Companies that have implemented an anti-money laundering program pursuant to the Patriot Act should already have procedures for screening customers and documenting these efforts. For additional information on anti-money laundering, and JVC’s Patriot Act Compliance Kit, visit our website at www.jvclegal.org.
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 Summer 2011
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