Office of Foreign Assets Control (OFAC)
The United States Department of the Treasury has used economic and trade sanctions to support U.S. foreign policy and national security interests since the early 1800s. The Treasury Department’s Office of Foreign Assets Control, or OFAC, is responsible for implementing, administering and enforcing these sanctions programs.
Today, various sanctions programs administered by OFAC prohibit U.S. citizens, permanent residents of the U.S. and U.S.-based businesses, including U.S. branches of foreign companies, from engaging in business or financial transactions with any party included on OFAC's Specially Designated Nationals List (SDN List). The SDN List, which contains thousands of names, includes individuals, banks, businesses, vessels and other organizations that have been targeted and blocked by the U.S. Government for various policy reasons, such as terrorism, drug trafficking and weapons of mass destruction proliferators. Because of the ever-changing foreign policy landscape, OFAC frequently makes changes to the SDN List.
Significant monetary fines can be imposed on persons or companies engaging in business or other transactions with parties on the SDN List, even if such activity occurred inadvertently. In addition, OFAC publishes the names of companies that have been penalized. For reputational and policy reasons, companies may choose not to engage in certain transactions with parties on the SDN List, even if not legally prohibited.
The only way businesses can ensure that they do not engage in a transaction with a party on the SDN List and remain compliant with OFAC’s sanctions regulations is to frequently check the names of persons and other parties it does business with against the constantly changing OFAC SDN List.
To learn how to avoid these costly fines as well as reputational damage, click here: Becoming OFAC Compliant.