Do you have an OFAC compliance program for your international trade activities?
In an increasingly globalized economy, business transactions proliferate in a myriad of international trajectories. When doing business overseas, you must not only be aware of the Foreign Corrupt Practices Act (FCPA), you must also take note of the Office of Foreign Assets Control (OFAC). The OFAC is under the U.S. Treasury Department and was created during the Korean War. Its primary function is to enforce regulations against nations, corporations, and individuals that pose a threat to national security. A country, individual, or corporation is sanctioned on the basis of involvement with terrorist activities, narcotics trade, and other international crimes.
Sanctions are categorized as country-based and list-based. Country-based sanctions may differ from one country to another, some sanctions more restrictive than others. Sanctioned individuals and companies are maintained on OFAC’s specially designated nationals and blocked persons (“SDN”) list. The SDN list is updated frequently on the OFAC website.
There are severe penalties for violations of OFAC regulations. Violations can result in steep monetary fines and/or imprisonment. One single transaction can result in multiple violations. In recent years, OFAC enforcement has increased dramatically. Although OFAC regulations can impact a multitude of industries, some industries that are particularly at risk due to the international nature of their business dealings include (but are not limited to) industries in oil and gas, banking/financial, securities, and insurance.
Is your company’s compliance program robust enough to prevent OFAC violations? If your company conducts business overseas or has a global reach, you must be aware of the OFAC regulations, assess your risk of violation, and implement a robust training program to ensure compliance.
Kimberly Dang | McCullough Sudan PLLC
Photo credit: Radiant Skies – 123rf.com