The Office of Foreign Assets Control (OFAC) is part of the U.S. Department of the Treasury. It is responsible for administering and enforcing trade and economic sanctions. The OFAC countries list is compiled based on national security and United States foreign policy goals.
Regimes and governments are added to the OFAC country list for the following reasons:
- International narcotics trafficking
- Proliferation of weapons of mass destruction (WMD)
- Other threats to the economy, national security, or foreign policy of the U.S.
International mandates, including those from the United Nations, are a factor in OFAC sanctions.
Dedicated legislation, in addition to the national emergency powers of the President, allow OFAC to be enforced by freezing assets under U.S. jurisdiction and imposing controls on assets, while cooperating with allied governments.
Why is OFAC important?
Organizations must be aware of the impact that OFAC regulations can have on their business, and take care to avoid doing business with sanctioned entities. All companies incorporated in the United States, as well as their foreign subsidiaries, must comply with OFAC requirements in order to avoid substantial fines that can be detrimental to their business, in addition to possible imprisonment for employees.
Depending on the program, violators risk being liable for the following OFAC penalties:
Criminal penalties: $50,000 to $10,000,000 fine; 10 to 30 years in prison
Civil penalties: $250,000 or twice the amount of each underlying transaction (up to $1,075,000 per violation)
Types of OFAC Sanctions
There are several different types of OFAC lists. Some names may overlap (for example, a person/firm associated with terrorism in Iran would be on both the Iran and terrorism lists), but a reliable OFAC list search tool will screen your clients, suppliers, and partners for all of these so nothing falls through the cracks.
[The following are links]
Specially Designated Nationals List (OFAC SDN List)
Counter Terrorism Sanctions
Counter-Narcotic Trafficking Sanctions
Other OFAC Sanctions