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OFAC Publishes Guidance for Sanctions Compliance Framework

New U.S. sanctions have come steadily this year.

It can be hard to keep up. Persons and organizations from Venezuela to Iran, Russia to the Congo, and elsewhere, have been added to prohibition lists, which continue to change.

Sanctions are complex. OFAC regularly enforces them, levying fines on companies it thinks has violated them. And, according to Attorney Michael Volkov, CEO of The Volkov Law Group, “OFAC regularly pushes the limits of its jurisdiction. They’re not afraid to test the boundaries … the law is not well fleshed out. Meaning, OFAC will not hesitate to bring enforcement actions against cases of first impression, against conduct it deems to violate the spirit of the sanctions program.”

Yikes!

If you are mystified by your company’s responsibilities related to sanctions, there is new help. In May the Department of Treasury’s Office of Foreign Assets Control (OFAC) published new guidance on how to create a framework for an effective sanctions compliance program. It can help you comply and, if you should inadvertently run afoul of the complex rules and be assessed a civil penalty, having an effective sanctions compliance program (SCP) in place can help you mitigate the penalty.

Volkov says, “OFAC has demonstrated an aggressive policy of enforcement this year in particular … In this new era of aggressive OFAC sanctions enforcement, companies subject to OFAC jurisdiction should be mindful of the requirements for an effective SCP.”

The law firm Alston & Bird reports: “OFAC sets forth, for the first time, five components that the agency views as essential for a sanctions compliance program. Since OFAC gives significant weight to the efficacy of a company’s compliance program in its enforcement actions, companies can now use OFAC’s guidance as a roadmap to determine whether their own compliance controls align with OFAC’s expectations.”

The release of the OFAC guidelines, were issued a couple of days after the Department of Justice issued new guidelines for white collar and anti-trust compliance programs aiming to ensure programs are effective. According to Sheppard, Mullin, Richter & Hampton LLP, DOJ’s guidance centers on three questions: (1) Is the corporation’s compliance program well designed? (2) Is the program being applied earnestly, effectively, and in good faith? and (3) Does the corporation’s compliance program work in practice?

Together the DOJ and DOT/OFAC guidelines serve to provide a framework for compliance programs. The OFAC document “is meant to assist prosecutors in making informed decisions as to whether, and to what extent, the corporation’s compliance program was effective at the time of the offense, and is effective at the time of a charging decision or resolution, for purposes of determining the appropriate (1) form of any resolution or prosecution; (2) monetary penalty, if any; and (3) compliance obligations contained in any corporate criminal resolution (e.g., monitorship or reporting obligations).

According to an article by Alston & Bird, OFAC says compliance should be based on five core components:

  • Management Commitment
  • Risk Assessment
  • Internal Controls
  • Testing and Auditing
  • Training

By availing themselves of the guidelines, companies can take steps to review and strengthen or construct their compliance programs to prevent sanction violations and mitigate penalties should an apparent violation occur in spite of the SCP.

Vendor checks against sanction lists are an important part of a sanctions compliance program. To learn how VendorInfo can help with your sanctions compliance program, click here to request more information or call (678) 335-5735.

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