OFAC Voluntary Self-Disclosures
The U.S. Office of Foreign Assets Control (OFAC) offers a Voluntary Self-Disclosure – an opportunity to mitigate potential sanctions-related risks for those aiming to retain their strategic market positions while remaining outside OFAC U.S economic and trade sanctions otherwise.
The experienced sanctions lawyers specialize can guide you through the voluntary disclosure programs to help ensure you achieve compliance and avoid an IRS audit.
If you have entered into relations with an SDN-listed person or if your business dealings have involved high-risk jurisdictions or sectors subject to OFAC sanctions, VSD is a critical step toward reducing civil penalties and demonstrating to enforcement authorities your commitment to compliance and transparency. We understand the importance of acting prudently and promptly in such cases, as a single misstep could lead to an OFAC investigation or sanctions, putting both the company’s reputation and assets at risk.
What is OFAC Voluntary Self-Disclosure (“VSD”)?
Voluntary Self-Disclosure (VSD) is a self-initiated notification of an apparent violation or substantially similar apparent violations of OFAC or sanctions laws (such as Presidential Executive Orders or regulatory acts administered or enforced by OFAC) committed by an entity or in which it was involved. VSD must be submitted before OFAC (or any other federal, state, or local government agency or official) identifies the violation. Violations can range from single incidents to systemic compliance failures, for which different sanctions penalties can be imposed.
Timely and voluntary disclosure is essential for the recognition of VSD and serves as a mechanism to avoid the most severe repercussions. Our team possesses extensive expertise, not only in classifying violations accurately but also in effectively minimizing their impact and securing the best possible outcome for our clients. We understand the intricacies necessary to convince OFAC of your business’s good faith and compliance orientation.
When Should a Person or Company Consider an OFAC Voluntary Self-Disclosure?
The sooner you initiate a VSD, the greater the likelihood that any sanctions and export control-related consequences will be minimized. VSD must be initiated before OFAC or any other federal, state, or local government agency or official detects the violation.
In practice, this means that VSD should be pursued as soon as a violation potentially subject to sanctions is identified. Rather than waiting for OFAC enforcement actions, it is preferable to proactively initiate and control the process, minimizing the risk of unexpected enforcement measures. Taking proactive steps and consulting with specialists ensures that regulators see your company as a partner committed to compliance rather than a violator.
How Do We Help?
We understand that sanctions compliance requires a delicate and confidential approach. Our sanctions law firm structures a VSD with careful consideration of the nuances that allow the situation to be presented as accurately as possible while safeguarding the client’s interests. We ensure that only the information necessary to establish a transparent position before OFAC is disclosed, avoiding unnecessary details that could complicate the matter.
Our approach focuses on creating a legal framework that demonstrates a willingness to cooperate without over-disclosure. Through thorough analysis of all involved parties, we identify safe disclosure parameters, safeguarding sensitive information the client may not wish to make fully public. Our OFAC attorneys skillfully construct the chronology and economic data to meet OFAC’s requirements while preserving client confidentiality. We design corrective and preventive measures to emphasize a commitment to compliance improvements without drawing excessive attention to past actions.
This approach allows clients to meet sanctions compliance requirements while preserving both reputational and informational security. We guarantee maximum protection of interests and confidence that risks will be minimized to a safe level.
Voluntary Self-Disclosure Process
The VSD process begins with an internal review. With the support of an attorney experienced in OFAC matters, the company or individual should determine the optimal way to submit initial information to the regulator. At this stage, it is often advisable not to disclose all details immediately but rather to begin with a general overview of the situation, providing further specifics as needed. It is essential to notify OFAC that a potential sanctions violation has been identified and that an internal investigation is underway.
Self-disclosure is an ongoing process that requires continuous engagement with OFAC. It is not a one-time action but rather an extended negotiation aimed at reaching mutual understanding and reducing the severity of potential sanctions. Legal support at every stage is critical to a successful outcome. It is essential to involve OFAC agents from the earliest phases, keep them informed, and engage in negotiations over potential resolutions as appropriate.
Penalty Mitigation
VSD can significantly mitigate OFAC’s response to a economic and trade sanctions violation. OFAC considers VSD a mitigating factor, but only when cooperation is handled correctly. Practical mitigation outcomes depend on the degree of cooperation with OFAC. Under OFAC’s guidelines, the level of cooperation by the subject with OFAC is a critically important factor in determining the appropriate enforcement measures for an apparent potentially criminal violations. Cooperation with OFAC can play a decisive role in penalty reduction: “a Subject Person’s level of cooperation with OFAC is an important factor in determining the appropriate enforcement response to an apparent violation (…) disclosure by a Subject Person generally will result in mitigation insofar as it represents cooperation with OFAC’s investigation” (31 CFR Appendix A to Part 501).
Even partial disclosure by a subject, demonstrating willingness to assist OFAC’s investigation potential criminal violations, may be considered a substantial mitigating factor in penalty assessment.
Contact Sanctions Lawyers and Solicitors
If you require professional assistance for submitting a Voluntary Self-Disclosure to OFAC or are facing sanctions-related risks, contact our experienced sanctions attorneys. We will safeguard your interests and minimize potential consequences.
Firstly, the completeness of disclosure is critical—OFAC assesses how comprehensive and detailed the information provided about the apparent violation is. Secondly, OFAC examines the subject's good faith and willingness to cooperate, specifically the voluntariness of the information provided and the promptness of responses to the regulator's requests. Thirdly, OFAC considers corrective actions taken: what remedial steps have been implemented to address the issue and prevent similar potential violations in the future.
OFAC may reject a VSD under certain conditions. Such cases include situations where the submitted information is incomplete or insufficient, where the disclosure contains false or misleading statements, and when the initiative does not originate from the subject itself but is instead prompted by regulatory requirements, as we noted earlier. We ensure that each disclosure aligns with OFAC’s requirements, minimizing the risk of rejection.
Submitting a VSD to OFAC is a complex process with multiple risks. Without a qualified attorney, the chances of mistakes increase, which could lead to a rejection or even more severe sanctions. Our legal team is experienced in structuring and submitting VSDs to maximize the likelihood of a favorable outcome.
The duration of the VSD process depends on the complexity of the identified violation, as well as the completeness and accuracy of the information disclosed. The more complex the violation, the more time is required for analysis and review. However, full and accurate disclosure can significantly expedite the process. We strive to ensure that the process proceeds as smoothly and quickly as possible, providing prompt responses to all regulator inquiries.
Maximum detail is a critical component of a successful VSD. The more precise and thorough the information provided, the higher the likelihood that OFAC will recognize your commitment to addressing the issue. Every aspect must be covered—each transaction and each involved party should be clearly described and documented.
Timeliness is paramount in submitting a VSD. The sooner disclosure is initiated, the greater the likelihood of penalty mitigation. VSD is applicable only before OFAC’s discovery of the violation. Any delay may be seen as bad faith or an attempt to conceal information, which could worsen the situation. We provide prompt and thorough support at every stage to minimize risks and protect your interests to the fullest extent.
