The increasing possibility that US businesses, no matter how small, will have foreign suppliers or clients, makes it imperative that they understand Office of Foreign Asset Control Compliance is. Businesses are responsible for following OFAC regulations designed to halt terrorist and other illegal funds from circulating
If you are in an industry with signficant foreign business, a small business owner, or an individual doing business, here are the top five areas to familiarize yourself with.
1. What OFAC Compliance Means
The Office of Foreign Assets Control administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. All U.S. persons (which by legal definition includes firms) must abide by these sanctions—this is the meaning of compliance.
(Information adapted from the OFAC FAQ webpage)
2. Who Must Be in Compliance
All U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, such as those regarding Cuba and North Korea, all foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S. origin goods to comply.
(From the OFAC FAQ webpage)
3. Industry Specific Information
OFAC provides downloadable guidelines and FAQs for specific industries, including:
- Financial Sector
- Money Service Businesses
- Insurance Industry
- Exporters and Importers
- Tourism / Travel
- Credit Reporting
- Non-Governmental Organizations (NGOs) / Non-profit
- Corporate Registration
Information is available on the OFAC Information for Industry Groups page.
4. OFAC Country And List-based Sanctions
OFAC Country Sanctions and List-Based Sanctions, including general licenses for exceptions; related documents; and laws, rules and regulations authorizing the sanctions are available on the OFAC Sanctions webpage
Included on the Country Sanctions List Are:
- The Balkans
- Belarus
- Burma
- Cote d'Ivoire (Ivory Coast)
- Cuba
- Democratic Republic of the Congo
- Iran
- Iraq
- Liberia
- North Korea
- Sudan
- Syria
- Zimbabwe
List-Based Sanctions Programs Include:
- Anti-Terrorism
- Counter Narcotics Trafficking
- Non-proliferation
- Diamond Trading
5. Specially Designated Nationals (SDN) List
OFAC publishes a list of Specially Designated Nationals and Blocked Persons ("SDN list") which includes over 3,500 names of companies and individuals connected with the sanctions targets. A number of the named individuals and entities are known to move from country to country and may end up in unexpected locations. U.S. persons are prohibited from dealing with SDNs wherever they are located and all SDN assets are blocked. It is important to check OFAC's website on a regular basis to ensure that your SDN list is current.
(Information adapted from the OFAC FAQ webpage)