OFAC Sanctions Lawyers are legal experts who help clients navigate economic and trade sanctions imposed by the Office of Foreign Assets Control (OFAC). They assist businesses, financial institutions, and individuals in understanding and complying with relevant regulations. Their expertise includes risk assessments, due diligence, and developing internal policies. These lawyers also support clients in obtaining licenses, addressing OFAC inquiries, and representing them in enforcement actions. Their guidance helps clients mitigate risks, avoid penalties, and maintain their global reputation.
The Office of Foreign Assets Control(OFAC) is a specialized division of the United States Department of the Treasury, headquartered in Washington, D.C. Working under the treasury’s office, it is responsible for administering and enforcing economic and trade sanctions aimed at compelling foreign entities to change specific behaviors, such as an alleged violation of sovereignty, military actions, or human rights abuses. These measures often include prohibitions for American companies and individuals from conducting business with certain foreign countries or specific individuals, as well as blocking the assets of these individuals.
The OFAC administrative subpoena affects American and some foreign companies, through trade and economic sanctions, including exporters, financial institutions, companies in various industries, and even non-profit organizations. This directly impacts the activities of many American and foreign enterprises.
A key aspect of the sanction regime is the ability of the U.S. to include foreign entities (both individuals and legal organizations) in sanction lists for u.s economic sanctions. These entities are included in the Specially Designated Nationals (SDN) and Blocked Persons List or other OFAC sanction lists for US economic sanctions.
If an entity is added to the OFAC SDN List, persons subject to U.S. jurisdiction are prohibited from engaging in most types of business transactions with it globally, and the entity loses access to the U.S. dollar financial system. Moreover, U.S. persons are required to block the assets of these persons in their possession and are prohibited from conducting business with them.
Among other functions, OFAC:
An independent Legal Opinion confirms compliance with the constantly changing OFAC sanction requirements generally and specifically for: interactions with banking structures, opening and annual review of corporate accounts, conducting cross-border payments, complex international financial transactions, provision of credit lines, and other financial products. The Legal Opinion confirms sanctions compliance for the issuance of letters of credit and guarantees, as well as for venture funds and private investors, providing documentation for due diligence and protecting investments from sanction risks.
In the context of office of Foreign Assets and OFAC licensing and permits, the Legal Opinion confirms adherence to sanction legislation for obtaining and renewing licenses, entering into long-term contracts, and engaging new business partners.
For internal audits, an OFAC lawyer confirms compliance and adjustment of internal policies and provides documentary evidence for external auditors and regulators. In the event of legal disputes, it serves as proof of compliance with sanction norms and defense in international arbitrations.
For insurance purposes, it confirms OFAC compliance when insuring risks of international operations, export, import, cargo, and logistics operations. For internal purposes, an OFAC license attorney helps to monitor sanction risks and ensure transparency for the board of directors and shareholders, guaranteeing adherence to corporate governance standards.
You may directly or indirectly fall under OFAC Sanctions Regimes, if you or your company:
Engaging in seemingly lawful activities can subject you to both primary and secondary economic sanctions, depending on various reasons. Therefore, it is crucial to meticulously comply with sanction regimes and legal counsel from qualified lawyers to deal with OFAC sanction proceedings when served with administrative subpoenas to avoid violations that can lead to serious legal and financial consequences, such as asset freezes, bans on conducting business, and travel restrictions to the United States.
An OFAC Sanctions lawyer is a legal expert specializing in advising and representing clients regarding compliance with the regulations and requirements imposed by the Office of Foreign Assets Control. These attorneys have a comprehensive understanding of U.S economic sanctions and play a key role in assisting businesses, financial institutions, and individuals in navigating the complexities of the ever-evolving sanctions landscape.
The expertise of an OFAC attorney encompasses guiding individuals and companies on risk assessment and due diligence. An OFAC lawyer also aids in the development of internal policies and procedures to ensure sanctions compliance. Additionally, they help to obtain the necessary specific licenses, respond to OFAC inquiries and investigations, and represent clients in enforcement actions. By leveraging their profound understanding of the sanctions environment, OFAC Sanctions Attorneys help clients mitigate potential risks and avoid severe penalties for non-compliance.
OFAC is empowered to impose U.S economic sanctions through the implementation of Presidential Executive Orders (EO) issued under the International Emergency Economic Powers Act (IEEPA). The jurisdiction of such measures extends to U.S. citizens and permanent residents, regardless of their location, as well as all individuals and organizations within the United States.
All foreign assets controlled by American corporations and their overseas branches are required to comply with OFAC regulations and export controls. Under specific programs, foreign subsidiaries owned or controlled by American companies in certain countries must also adhere to these rules. Additionally, certain programs mandate compliance with OFAC regulations by foreign persons who possess goods of U.S. origin.
Although not explicitly stated, it is important to consider the extraterritorial application of these sanctions. OFAC’s sanction policies must be followed by all individuals and organizations, regardless of their legal or actual location within or outside the U.S., if they wish to avoid secondary sanctions and OFAC blockages.
Additionally, to ensure compliance with the aforementioned requirements, companies must develop and implement effective compliance programs aimed at adhering to OFAC laws and regulations.
Compliance programs are a set of measures and procedures designed to ensure that a company’s activities comply with OFAC’s legislative and regulatory requirements. These programs include risk assessments, the development and implementation of internal policies and procedures, employee training, the appointment of responsible individuals, as well as regular monitoring and auditing to timely identify and address potential violations.
Compliance programs focused on adhering to OFAC requirements play a crucial role in minimizing the risks associated with violating OFAC sanction regimes and in maintaining the legal security and reliability of companies.
Sanctions attorneys, when developing an effective sanctions compliance program, consider various aspects of a company’s operations. The initial stage is risk assessment, which involves analyzing the client base and the nature of operations. The stability and localization of the client base play an important role: the more stable and localized the clients, the lower the risk of violating sanction regimes. If the client base changes due to mergers, acquisitions, or international market expansion, the level of risk increases. A significant number of high-risk clients, such as foreign nationals and commercial organizations, also require stricter control and additional national security and measures.
Financial institutions with international branches and correspondent accounts in foreign banks are exposed to higher risks, especially if they offer a wide range of electronic services, such as internet banking and international transfers. Electronic services themselves add complexity, as they require ensuring security and compliance at every stage of client interaction.
The history of interactions with OFAC also plays a crucial role in risk assessment. The absence of violations and notifications from OFAC indicates low risk, whereas recent serious OFAC enforcement actions, such as fines and warnings and criminal violations, indicate the need for stricter control measures and improvement of the compliance program. Repeated violations can significantly increase the risk of further sanctions.
The effectiveness of management within the compliance program is evaluated based on the leadership’s ability to understand and adequately respond to key aspects of OFAC compliance. A high level of awareness and communication within the organization helps reduce risks. It is important for the board of directors or a relevant committee to approve and regularly review compliance policies and procedures, ensuring their relevance and effectiveness.
The appropriate level of personnel responsible for implementing the compliance program is a critical factor. A lack of qualified staff can lead to program inefficiency and increased risks. Appointing a qualified compliance officer with the necessary authority and resources helps maintain a high level of adherence to OFAC requirements.
Employee training must be comprehensive and up-to-date, covering all aspects of compliance, including the latest changes in sanction regimes and regulatory acts. Effective quality control methods are also an integral part of the compliance program, ensuring timely identification and resolution of potential violations.
An OFAC compliance program is essential for a wide range of businesses. Primarily, this includes financial institutions such as banks, insurance companies, and investment funds that may conduct international transactions or deal with foreign clients. However, the need for such programs extends beyond the financial sector.
Companies engaged in export and import, international trade, logistics, as well as those providing electronic services or digital products on an international level, must also comply with OFAC requirements. Any organization that may have business relationships with foreign counterparts or conduct operations abroad should implement and maintain an effective compliance program to minimize risks and ensure adherence to international trade and sanctions laws.
Contact Us to Order an OFAC Compliance Program or get assistance regarding any alleged violations.
Violations of the sanctions regimes established by the office of foreign assets control (OFAC) can result in fines or administrative and criminal penalties. OFAC has the authority to impose substantial fines for sanctions violations (31 CFR 501). These fines can vary depending on the specific law or sanction program violation.
The maximum amounts of civil penalties for violations imposed on financial institutions under various laws under OFAC’s jurisdiction are as follows:
The amounts of civil penalties provided for by these laws are subject to adjustment per the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).
Prohibited transactions include any operations with individuals or organizations listed on the SDN List. The SDN List contains information on persons and companies subject to sanctions. In certain cases, an exception for such transactions may be granted through obtaining a specific license from OFAC or utilizing a general license if it covers the necessary scope of such transactions. This allows conducting business or engaging in deals that would otherwise be prohibited.
Depending on each case and the specific sanctions regime, Prohibited Transactions may include:
It is prohibited to conduct any transactions involving goods, services, or products originating from the targeted country. Facilitating any transaction prohibited by economic or trade sanctions for U.S. persons is also not allowed. Fund transfers to or from financial accounts in which an SDN or blocked person has an interest or that are in the targeted country are prohibited. Extending credit or providing financial services to any person on the OFAC SDN list is also a prohibited transaction.
Our law firm is ready to provide you with qualified assistance. We have extensive successful experience in handling cases related to sanctions. Our partners in the U.S., including Kendall Coffey, a former federal prosecutor from the State of Florida, have delivered reliable solutions to clients worldwide, ensuring compliance and conducting due diligence. We specialize in unblocking frozen funds and assets through obtaining OFAC licenses. Our expertise covers various OFAC frameworks, particularly concerning Venezuela, Russia, Belarus, and Iran, including E.O 13808 and 14024. We emphasize the importance of vigilance in transactions to avoid engaging with SDNs without proper authorization.
OFAC’s 50 Percent Rule, as outlined in the Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked, issued by the Department of the Treasury, Washington, D.C. 20220, on August 13, 2014, states that any entity that is owned 50% or more by a blocked person or entity is considered blocked by OFAC. This rule is designed to prevent sanctions evasion through ownership stakes in companies.
The 50 Percent Rule regulates the status of organizations where blocked individuals have significant ownership interests. According to the “50 Percent Rule”, any property or interests in property owned by blocked people are subject to blocking. Blocked property includes not only current assets but also future or contingent interests, as well as any direct or indirect interests in property. If a blocked person owns 50 percent or more of an organization, that organization is automatically considered blocked.
This means that all property and interests in property of such an organization are also blocked, even if the organization itself is not listed on the OFAC SDN list. As a result, U.S. persons are prohibited from engaging in any transactions with such organizations without specific authorization from OFAC.
It’s important to note that the “50 Percent Rule” applies regardless of how control over the organization is achieved – whether through direct or indirect ownership. Therefore, even if multiple blocked people jointly own a stake exceeding 50 percent OFAC screening itself, the organization will be considered blocked.
Furthermore, U.S. persons are advised to exercise caution when dealing with organizations where blocked persons hold significant ownership interests, even if those stakes are less than 50 percent. Such organizations may face future sanctions or other measures from OFAC. Additionally, it is prohibited to procure goods, services, or technology from blocked persons, including situations where transactions are conducted through third parties.
OFAC incorporates the provisions of the “50 Percent Rule” into new sanction programs and makes corresponding amendments to existing programs. This underscores the importance of strict compliance with all regulatory requirements to minimize risks and prevent violations of sanction regimes.
Companies and individuals involved in international transactions must carefully monitor compliance with OFAC’s 50 Percent Rule, conduct thorough due diligence on their counterparties, and seek timely advice from sanctions lawyers. This will help them avoid potential legal consequences and preserve their business reputation.
These are comprehensive measures imposed on specific states to alter their behavior through economic and political pressure. These sanctions encompass trade embargoes, financial restrictions, and arms transfer prohibitions, authorized by executive orders and legislative acts. Their primary objective is to mitigate threats to U.S. national security and foreign policy interests
In the context of this article, several examples of current restrictive measures are presented:
They are also known as targeted sanctions, are directed at specific individuals or businesses responsible for actions detrimental to U.S. interests or international stability. These measures include asset freezes, travel bans, and business restrictions with U.S. entities. The goal is to exert pressure on key actors while minimizing broader humanitarian impacts. They are administered based on meticulous legal and intelligence assessments
In the context of this article, several examples of current restrictive measures are presented:
These target key sectors of a targeted nation’s economy, such as energy, finance, defense, and technology. These sanctions involve restrictions on transactions, investments, and the provision of goods and services within these sectors. The intent is to weaken the economic foundation of the targeted regime, thereby influencing its behavior
In the context of this article, several examples of current restrictive measures are presented:
These extend the reach of U.S. sanctions by penalizing foreign entities that engage with sanctioned organization or other countries. These measures compel global compliance with U.S. foreign policy objectives by threatening exclusion from the U.S. financial system, prohibiting correspondent banking relationships, and denying market access. Secondary sanctions ensure that non-U.S. persons and companies adhere to U.S. sanctions policies, thereby amplifying their effectiveness.
OFAC applies 37 sanction regimes, with countries subject to full or partial OFAC sanctions due to reasons including support for terrorism, human rights violations, development of nuclear weapons programs, and other breaches of international norms.
OFAC sanctions target countries and regimes for a variety of reasons, such as human rights violations, support for terrorism, or proliferation of weapons of mass destruction. Some of the targeted countries and regimes include:
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