OFAC Enforcement Lawyers
OFAC can impose civil penalties of up to $1.3 million per violation. Our enforcement attorneys help businesses and individuals navigate sanctions investigations, defend against OFAC enforcement actions, and negotiate settlements to minimize penalties.
OFAC enforcement is the process by which the U.S. Office of Foreign Assets Control investigates and penalizes violations of sanctions laws. OFAC has broad enforcement authority: civil penalties can reach $1.3 million per violation (or twice the transaction value), and criminal cases can result in up to 20 years imprisonment. The Collegium of International Lawyers represents clients in OFAC enforcement proceedings and negotiates favorable settlements.
OFAC Civil Penalty Ranges
| Penalty Type | Amount | When Applied |
|---|---|---|
| No-action letter | No penalty | Minor violation, voluntary disclosure, strong compliance program |
| Civil penalty — non-egregious | Up to $375,445 per violation | Violation without aggravating factors |
| Civil penalty — egregious | Up to $1.3M or 2× transaction value | Willful or reckless violations |
| Criminal fine | Up to $1 million per violation | Willful violations referred to DOJ |
| Imprisonment | Up to 20 years | Serious willful violations |
OFAC enforcement lawyers play a vital role in assisting businesses and individuals in navigating the complex landscape of U.S. economic sanctions programs. The Office of Foreign Assets Control (OFAC) administers and enforces these sanctions, and their enforcement actions aim to ensure compliance while protecting U.S. national security and foreign policy interests. With the potential for substantial penalties, it is crucial to engage the services of experienced OFAC enforcement lawyers.
These specialized lawyers help clients proactively address potential sanctions violations and mitigate risks associated with enforcement actions. By conducting thorough internal investigations, OFAC enforcement lawyers can identify potential compliance issues and recommend appropriate remedial actions. This process is essential for minimizing the risk of penalties and ensuring that organizations take potential violations seriously.
Our OFAC Enforcement Lawyers have recently represented clients in the following OFAC enforcement cases:
- Representation of a foreign financial institution in OFAC investigations into evident violations of sanctions programs. Several of these investigations were concluded with Cautionary Letters.
- Freight forwarders are represented in OFAC investigations into evident violations of the Iranian Transactions and Sanctions Regulations. Several of these investigations were concluded with Cautionary Letters.
- Representation of a web design firm in an OFAC investigation into apparent violations of the Iranian Transactions and Sanctions Regulations.
- Representation of a social media corporation during an OFAC investigation into alleged violations of the Iranian Transactions and Sanctions Regulations. The case resulted in the issuance of a Cautionary Letter.
- Representation of a U.S. citizen who owned and operated a distribution corporation for medical devices in Iran. Case resulted in the issuance of a Cautionary Letter.
- Representation of numerous U.S. businesses with employees in Iran. All were accompanied by Cautionary Letters.
- Representation of U.S. citizens under investigation for violating Russia sanctions due to their provision of services to Crimea. Resulted in the issuance of a Cautionary Letter.
- Representation of a U.S. bank in an OFAC investigation and response to an administrative subpoena for alleged violations of Ukraine-related Russia sanctions. Case resulted in the issuance of a Cautionary (Warning) Letter.
- Representation of a U.S. company with Iranian shareholders. Case resulted in the issuance of a Cautionary Letter.
In the event of a potential sanctions violation, OFAC enforcement lawyers can guide clients through the process of preparing and submitting voluntary self-disclosures to OFAC. By doing so, they may secure reduced penalties or other favorable outcomes for their clients. Additionally, these lawyers can represent clients in negotiations with OFAC during the settlement process or defend against administrative proceedings initiated by the agency.
OFAC enforcement lawyers possess a deep understanding of the various factors that can influence the outcome of an enforcement action, such as the severity of the infraction, the presence of mitigating or aggravating factors, and the extent of the violator’s cooperation during the investigation. Armed with this knowledge, they can devise effective strategies to protect their client’s interests and secure the best possible outcome in enforcement actions.
In conclusion, OFAC enforcement lawyers provide essential legal representation and guidance to businesses and individuals navigating the enforcement process under U.S. economic sanctions programs. By helping clients address potential violations, manage risks, and protect their interests, these lawyers play a critical role in ensuring compliance with the complex web of sanctions laws and regulations.
OFAC enforcement actions crypto
The Office of Foreign Assets Control (“OFAC”) of the U.S. Treasury Department announced a settlement with a multi-asset trading platform that incorporates digital assets on March 31, 2023. The trading platform consented to pay $72,230 to settle its prospective civil liability for violations of OFAC sanctions against Iran, Cuba, and Venezuela.
According to OFAC, the trading platform failed to properly screen customers during its onboarding process for sanctions compliance and, as a result, processed transactions for customers located in Iran, Cuba, and Venezuela, in violation of OFAC sanctions. Customers were able to circumvent account opening screening procedures by selecting a non-sanctioned country from a drop-down menu and providing a separate location within a sanctioned country in a free-text address field that was not screened for sanctions compliance. Occasionally, consumers provided identification documents from a sanctioned nation, but the platform did not screen or notify those documents. OFAC stated that the trading platform “failed to exercise due caution or care when it onboarded or conducted due diligence on customers” and “implemented inadequate screening and other compliance processes.” OFAC’s announcement also stated that despite the fact that the maximum statutory civil monetary penalty applicable to the case was $44 million, the platform faced a significantly lower penalty because it voluntarily self-reported the violations, cooperated with OFAC’s investigation, and implemented significant remedial measures.
OFAC has intensified its focus on the cryptocurrency industry in recent years, declaring settlements with digital asset companies and sanctioning a cryptocurrency mixer. The Office of Foreign Assets Control (OFAC) published sanctions compliance guidance for the cryptocurrency industry in 2021, noting that the increasing prevalence of cryptocurrencies as a payment method increases sanctions risks.
OFAC is educating the crypto industry about its compliance requirements through its actions. The specific deficiencies emphasized by OFAC in this instance, such as the failure to screen all induction materials, should be noted by crypto companies. In addition, other compliance initiatives, such as employee training, should supplement automated screening solutions. Companies that provide money exchange services should conduct a risk assessment and employ a holistic approach to managing compliance risks that is reflective of their particular business systems, tools, and processes.
Frequently Asked Questions
What triggers an OFAC enforcement investigation?
OFAC enforcement investigations are typically triggered by suspicious transaction reports filed by U.S. financial institutions, whistleblower complaints, referrals from law enforcement agencies (FBI, HSI), or disclosures made by counterparties during their own investigations. OFAC may also initiate investigations proactively when reviewing blocked asset reports or monitoring high-risk trade corridors. Once an investigation begins, OFAC can issue subpoenas, freeze additional assets, and demand written responses under oath.
What is the difference between a civil and criminal OFAC violation?
Civil OFAC violations are administrative matters handled directly by OFAC and result in monetary penalties. They do not require proof of intent and can arise from negligence or inadequate compliance systems. Criminal OFAC violations involve willful or knowing conduct and are referred to the Department of Justice for prosecution. Criminal penalties include fines up to $1 million per count and imprisonment up to 20 years. Our attorneys assess exposure at both levels from the outset and coordinate civil and criminal defense strategy accordingly.
What is an OFAC pre-penalty notice?
An OFAC pre-penalty notice (PPN) is a formal document stating that OFAC intends to impose a specific civil monetary penalty and setting out the alleged violations. Upon receiving a PPN, the respondent has 30 days to submit a written response challenging the factual findings, the penalty calculation, or both. The response is a critical opportunity to present mitigating evidence, assert compliance program documentation, and negotiate a reduced settlement. Our attorneys prepare detailed PPN responses that have successfully reduced proposed penalties by 60-90%.
How does OFAC calculate civil monetary penalties?
OFAC calculates civil penalties using a base amount derived from the transaction value or a statutory maximum, then adjusts upward or downward based on aggravating and mitigating factors. Aggravating factors include willful conduct, harm to sanctions objectives, and failure to cooperate. Mitigating factors include Voluntary Self-Disclosure, a strong compliance program, prompt remediation, and no prior violations. The existence of a documented compliance program and early disclosure can reduce penalties from the statutory maximum to a cautionary letter with no fine.
Can OFAC enforcement actions affect my business licenses?
Yes. OFAC enforcement actions can trigger collateral consequences beyond the direct monetary penalty, including debarment from U.S. government contracts, loss of export privileges, regulatory scrutiny from banking regulators (OCC, FDIC, Federal Reserve), and reputational damage affecting correspondent banking relationships. Our attorneys work to resolve OFAC enforcement matters in a way that minimizes these secondary consequences, including negotiating settlement terms that do not require public disclosure where possible.