OFAC Update: A Busy 2021

The Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury has been busy in 2021. Voice of America catalogs new targeted sanctions imposed on a host of individuals by the Biden Administration since January 2021.

Targets include individuals in Russia for interference with the U.S. election, Myanmar generals involved in the overthrow of the government there, Saudi Arabians involved in the killing of a journalist, China for undermining civil rights in Hong Kong and its human rights abuses against China’s Uyghur minority. Those are the headliners. There are more.

“What does that have to do with me?” you ask. “We don’t deal with North Korea!”

Well, U.S. Government prohibitions go beyond the “headliners,” and companies without compliance procedures can get caught unaware. There are many individuals and entities on OFAC’s SDN list. The targeted sanctions list fills 1,500 pages. The prohibition against dealing with the sanctioned parties applies to all “U.S. persons,” whether you are a civilian individual working overseas for a U.S. Army (recently fined $5,000), or your company’s name is “Amazon.”

Those working in procure-to-pay encounter risk every day, and compliance issues are a fact of life. Among these is sanction compliance. OFAC maintains and enforces U.S. sanctions. Its programs include comprehensive and targeted sanctions.

On the enforcement front, the last year saw a drop in OFAC actions from a very busy 2019, but activity has picked up again. Fines over the past 12 months totaled a mere several million dollars, a significant drop from $1.3 billion in 2019. But 2020’s average settlement figure was still above $1 million.

According to Michael Volkov, CEO of The Volkov Law Group, OFAC maintains a dogged commitment to sanctions enforcement despite the pandemic. In the last year, corporations comprised two-thirds of OFAC’s enforcement targets, financial institutions only one-third. “This is important because it clearly sends the message that sanctions compliance is for every company, not only for banks,” says Vincent Gaudel, a compliance expert with Acuity.

Last July and October, respectively, OFAC brought enforcement actions against notables Amazon and Berkshire Hathaway. But you don’t have to be a multi-national to run into trouble. For recent activities, including list updates, enforcement actions and regulatory guidance, see https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions.

In January, Volkov predicted a “big enforcement year in 2021.” Willful violations are considerably more severe, of course. Gaudel warns that OFAC has become increasingly inclined towards holding individual executives accountable. “This should be made clear to everyone because it is likely to set a precedent,” Gaudel said. And the risks for “business executives who engage in willful sanction violations” can reach $20 million in fines and up to 30 years in prison. For civil violations, see Civil Penalties and Enforcement Information on the Treasury Department’s website.

Compliance, which is not an option, can be tricky. To ensure you’re going about it correctly, see OFAC: Are You Compliant or Just Think You Are?

If you want to learn how VendorInfo can help your compliance efforts, contact us.