What Is OFAC?

The Treasury Department has a long history of dealing with sanctions. Dating back prior to the War of 1812, Secretary of the Treasury Gallatin administered sanctions imposed against Great Britain for the harassment of American sailors. During the Civil War, Congress approved a law which prohibited transactions with the Confederacy, called for the forfeiture of goods involved in such transactions, and provided a licensing regime under rules and regulations administered by Treasury.

OFAC is the successor to the Office of Foreign Funds Control (the “FFC”), which was established at the advent of World War II following the German invasion of Norway in 1940. The FFC program was administered by the Secretary of the Treasury throughout the war. The FFC’s initial purpose was to prevent Nazi use of the occupied countries’ holdings of foreign exchange and securities and to prevent forced repatriation of funds belonging to nationals of those countries. These controls were later extended to protect assets of other invaded countries. After the United States formally entered World War II, the FFC played a leading role in economic warfare against the Axis powers by blocking enemy assets and prohibiting foreign trade and financial transactions.

OFAC itself was formally created in December 1950, following the entry of China into the Korean War, when President Truman declared a national emergency and blocked all Chinese and North Korean assets subject to U.S. jurisdiction.

When Congress makes the decision to place an embargo against a foreign nation, it is OFAC which has the responsibility for enforcing that embargo.

With the recent extensive and public violations many organizations have taken a second look at their sanctions/embargo compliance and to implement programs to help adhere to OFAC regulations.

What Penalties & Fines result from OFAC Violations?

Depending on the nature of the violation and other factors such as the country and industry involved, OFAC civil penalties can be as high as $1 million per violation for corporations and up to $250,000 per violation and 20 years imprisonment for individuals.  OFAC has charged fines in excess of $20 million during 2021.

Businesses can also face bad publicity and loss of business both domestically and internationally.  It pays to give more attention to OFAC compliance.

Export compliance applies to all businesses, big and small.  Any U.S. company that sends products, services, technology, or technical data to non-U.S. countries is bound by export control regulations.

The Office of Foreign Assets Control – Sanctions Programs and Information is complex to understand.  The sanctions programs are created to keep our country safe from our enemies.  Any business that does business internationally needs to ensure their compliance with these controls.

At On Call our compliance teams help you keep up with the constantly changing rules and regulations of import/export law and help you avoid OFAC penalties and rule violations.