Earlier this year, the U.S. Department of the Treasury issued a new “Framework for OFAC Compliance Commitments” (the “Framework”). The Office of Foreign Asset Control (“OFAC”) is the Treasury Department’s arm that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. The U.S. government targets foreign countries, terrorist organizations, narcotics traffickers, persons engaged in the proliferation of weapons of mass destruction, and other threats to national security, foreign policy, or the economy of the U.S. with certain economic and trade sanctions. OFAC imposes controls on economic transactions and freezes assets under U.S. jurisdiction. OFAC publishes a Specially Designated Nationals and Blocked Persons (“SDN”) list (along with other lists) of organizations and individuals who are subject to sanctions. U.S. companies are obligated to determine whether their counter-party to any international transaction is subject to sanctions.
OFAC’s Framework encourages organizations to employ a risk-based approach to sanctions compliance by implementing a sanctions compliance program. Although a risk-based approach means sanctions compliance programs may vary depending on a number of factors, OFAC considers the following five components “essential” to any sanctions compliance program:
- Management commitment - including the provision of adequate resources to the compliance unit and support for compliance personnel’s authority within the organization.
- Risk assessment - including routine risk assessments to identify potential OFAC issues likely to be encountered in the organization.
- Internal controls - including policies and procedures to identify, interdict, escalate, report, and document activity that is prohibited by OFAC-regulated sanctions.
- Testing and auditing - including assessment and analysis of current processes as well as identifying enhancements to the program to remediate gaps identified.
- Training - including periodic training for appropriate personnel to provide job-specific knowledge and communication of compliance responsibilities.
These five components reflect the “Hallmarks of Effective Compliance Programs” that we have discussed in prior alerts. OFAC will consider the existence, adequacy, and nature of a sanctions compliance program during an investigation and may mitigate civil monetary penalties based upon its evaluation of the program. All organizations dealing with international transactions should consider implementation of sanctions compliance into their risk assessments and existing compliance programs.
Heather Hatfield represents clients in corporate investigations, white-collar crime investigations and defense involving the Foreign Corrupt Practices Act (FCPA), complex contract disputes, oil and gas litigation ...
Blake Runions assists clients with broad range of business disputes and investigatory matters, including partnership disputes, internal investigations, and commercial litigation.
Prior to joining the Firm, Blake worked in the ...
Jamie Godsey represents public and private corporations, partnerships, and small companies on a broad range of complex business and commercial litigation. Her experience includes a wide variety of matters such as contractual ...
- Goldman Sachs Reaches Record $2.9 Billion Settlement of Malaysia FCPA Violations
- Recent Advisory Opinion Provides Important Guidance to Mitigate Sanctions Risk
- DOJ Releases Rare FCPA Opinion Procedure
- Essentra Settlement Demonstrates Government Commitment to Compliance Framework
- DOJ Updates Corporate Compliance Evaluation Guidance
- Political Retribution in Bridgegate Cannot Sustain Federal Fraud Convictions in Kelly v. United States
- Key Considerations in the Timing of FCPA Violation Disclosures
- Ensuring Compliance During the COVID-19 Pandemic
- Former Alston S.A. Exec’s FCPA Conviction Overturned
- Astros Scandal Demonstrates Importance of Tone at the Top