Companies and individuals in the United States can face serious legal jeopardy if they violate economic sanctions that the U.S. has imposed on another party. The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) is responsible for enforcing these sanctions, and has a reputation for aggressively prosecuting suspected violators. Furthermore, the reputational harm that comes with the mere allegation of violating U.S. sanctions can be difficult for a business to overcome.
The OFAC defense lawyers at The Criminal Defense Firm have extensive experience handling these extremely sensitive cases. Our attorneys have helped numerous clients mitigate the damage of an OFAC investigation by advocating vigorously on their behalf and taking an aggressive stance on defense.
Put our highly experienced team on your side
Brian J. Kuester
Former U.S. Attorney
Former DA
Amanda Marshall
Former U.S. Attorney
Local Counsel
Joe Brown
Former U.S. Attorney
& Former District Attorney
Local Counsel
John W. Sellers
Former Senior Trial Attorney
U.S. Department of Justice
Local Counsel
Linda Julin McNamara
Former Chief, DOJ Appeals
Local Counsel
Joanne Fine DeLena
Former Assistant U.S. Attorney
Local Counsel
Aaron L. Wiley
Former Federal Prosecutor
Local Counsel
Roger Bach
Former Special Agent (OIG)
Chris Quick
Former Special Agent (FBI & IRS-CI)
Kevin M. Sheridan
Former Special Agent (FBI)
Ray Yuen
Former Supervisory Special Agent (FBI)
Dennis A. Wichern
Former Special Agent-in-Charge (DEA)
OFAC’s Broad Jurisdiction
The President of the United States has the legal authority to impose economic sanctions on foreign individuals and companies in order to advance American interests abroad and to preserve national security. Once imposed, it is up to OFAC to enforce those sanctions.
Two U.S. laws give the President and OFAC this power.
The first is the Trading with the Enemy Act of 1917 (12 U.S.C. § 95 and 50 U.S.C. § 4301 et seq.), which gives the President the ability to restrict trade with the country’s adversaries during times of war. The second is the International Emergency Economic Powers Act of 1977, which expands the authority of the President to impose sanctions outside of wartime. That expansion drastically altered the face of economic sanction laws and is the justification for many of the sanctions imposed by the U.S. today. Since the Act was first created in 1977, several amendments to it have increased its reach even further and made the penalties of violating sanctions far more severe: In 1996, a Congressional amendment penalized even attempted violations of U.S. sanctions, while a 2007 amendment to the law increased criminal violations of U.S. sanctions to up to 20 years in prison and a $1 million fine.
Many businesses and their executives and stakeholders presume that this could not possibly apply to them, and that there is little need for enacting compliance measures to ensure the company does not violate the law. This could not be further from the truth. Just a few of the situations that can expose companies to criminal liability and OFAC prosecution are:
- The company conducts business outside of the U.S.
- A merger or acquisition alters the company’s customer base
- The business buys or sells products or equipment from another country
- The company has a foreign business partner
In any of these cases, international economic sanctions can be a looming threat to the success of the company.
Four Types of OFAC Sanction Programs
OFAC sanctions come in four different shapes. There are:
- Country sanctions,
- Smart sanctions,
- Sector sanctions, and
- Secondary sanctions.
Each targets a different group of people, companies, or industries.
Country-Based Sanctions
The easiest to understand is a country-based sanction. OFAC forbids unauthorized business transactions with companies or individuals from a specific country, or that are from a country and deal in certain types of business. Some examples are sanctions against trading in:
- Cuba
- North Korea
- Iran
- Russia
- China, when the transaction is related to the military
A key aspect of these sanctions is that they forbid unauthorized business transactions in these countries. Getting a license from OFAC to engage in business in sanctioned countries is possible. The OFAC lawyers and compliance professionals at The Criminal Defense Firm can help you apply for one and use it to advance your company’s interests.
Smart Sanctions
Smart sanctions target specific types of threats to U.S. interests and national security, rather than concretely-defined people or countries. OFAC has five categories for its smart sanction programs, targeting:
- Cyber-related conduct
- Counterterrorism
- Weapons proliferation
- International organized crime
- Genocide and human rights abuses
People and organizations that pose a threat to these American interests can be targeted and named in OFAC sanctioning. These include individual people, companies, other entities, international leaders, and even entire countries. They are recorded in OFAC’s Specially Designated Nationals or Blocked Persons (SDNs) list, which is publicly available. Importantly, American companies have a legal obligation to avoid transacting with parties listed as an SDN by OFAC.
While it is possible to get an OFAC license to deal with an SDN, they are often more difficult to obtain than other OFAC licenses.
Sector-Based Sanctions
OFAC also targets parties for economic sanctioning based on the sector of commerce that they do business in. They are generally also limited by their home country, as well. For example, Russian companies in many sectors are under sanction due to the ongoing conflict in Ukraine, but not Russian companies in certain other sectors.
Secondary Sanctions
While relatively uncommon, OFAC also imposes so-called secondary sanctions on targeted parties. These are imposed on parties that are not subject to other OFAC sanctions, but that do business with a sanctioned organization or individual. For example, an oil company that is not targeted by OFAC sanctions would face secondary sanctions if it violated the prohibition against selling oil in North Korea.
Frequently Asked Questions About The Criminal Defense Firm and its OFAC Services
What Does OFAC Compliance Entail?
A good OFAC compliance system will depend on the nature and the risks of the business adopting it. There is no one-size-fits-all OFAC compliance protocol. However, OFAC compliance generally entails the following elements:
- Management commitment to compliance, where high-level executives and managers make compliance a goal of the company and act on it by providing adequate resources to its compliance efforts and maintaining a culture of compliance at the organization
- Risk assessment, where compliance officials review the business operations of the company in order to discover where potential risks could arise
- Dissemination of internal controls, which let lower-level employees understand their role in preventing OFAC violations and explain how they can succeed in that role
- Testing and auditing, which periodically test the compliance system that is adopted for potential shortcomings or inefficiencies
- Employee training and retraining, where workers are taught how OFAC compliance works and what it means for them in their role at the company
Each of these steps requires personalized care and attention.
How Important is OFAC Compliance?
Complying with international economic sanctions is extremely important. Just take a look at the financial implications of a civil violation of just two of the numerous laws at issue:
- Trading with the Enemy Act: $91,816 per violation
- Foreign Narcotics Kingpin Designation Act: $1.5 million per violation
Firstly, these are the financial penalties per violation. Each business transaction with a sanctioned party is penalized in that amount. It is not uncommon for businesses to face dozens of counts, drastically increasing the financial penalties on the table.
Secondly, these are the civil violations. If pursued as a criminal violation, the penalties would increase still further.
Finally, these are just the financial penalties that a company or individual can face for doing business with a sanctioned party. Criminal OFAC prosecutions carry the potential for decades of prison time for executives that get convicted for deliberately evading sanctions. Companies that ignore OFAC sanctions will also face some significant blowback by the public, especially if the sanctioned party that they transacted with has any notoriety.
Why Should I Hire The Criminal Defense Firm?
There are numerous OFAC firms out there. There are several things that make The Criminal Defense Firm stand apart from them.
First, our firm is a national one. No matter where your company is located, we have local compliance professionals and legal counsel nearby.
Second, The Criminal Defense Firm is comprised of both experienced OFAC defense lawyers and OFAC compliance professionals. This means several things for your company:
- No matter where you are in the case, we have the people who can help – whether you want to implement OFAC compliance controls or have learned that you are under investigation by OFAC
- Both the compliance and the legal defense services that we provide are enhanced by the experience we have in providing the other one – for example, our legal team has learned which compliance strategies have failed for clients in the past, and that helps our compliance professionals craft better ones
Third, our legal team is made of senior-level lawyers only. There are no junior associates or paralegals that we can delegate your case to.
Why Doesn't The Criminal Defense Firm Call Itself the Best OFAC Firm?
That is something that we like to leave to our past clients. Many of them have written testimonials about the legal and compliance services that we provided.
OFAC Compliance and Defense at The Criminal Defense Firm
Taking advance precautions to comply with OFAC sanctions is the best way to avoid an invasive investigation, costly allegations, and the steep penalties of a conviction for violating economic sanctions. These penalties are severe, with the potential for decades in prison and hefty criminal fines, plus the extremely awkward blow to the offending company’s reputation. By adopting strict, thorough, and effective compliance mechanisms, companies and their stakeholders can avoid even the perception that they are potentially operating in violation of U.S. sanctions abroad.
The OFAC lawyers at The Criminal Defense Firm can help international and domestic companies enact these compliance measures and, should OFAC already be investigating the business for potential violations, vigorously defend the company both in the courtroom and in the court of public opinion.
Contact The Criminal Defense Firm online or call their national hotline at (866) 603-4540.
Additional OFAC Pages
- OFAC & AML – What You Need to Know
- OFAC Blocked Transactions – What This Means
- OFAC Clearance – What You Need to Know
- OFAC Compliance Checklist
- OFAC Enforcement Actions
- OFAC Enforcement Guidelines
- OFAC Requirements for 2023
- OFAC Risk Assessment and Review
- OFAC Sanctions List – Five Keys for Getting Removed
- Seven Keys to Selecting an OFAC Sanctions Defense Attorney
- Six OFAC Compliance Strategies
- Six OFAC Sanctions Defense Strategies
- Ten Keys to Creating an OFAC Compliance Policy
- The Ultimate Guide to OFAC’s Sanctions Against Tornado Cash
- Who Must Comply with OFAC Sanctions?
- OFAC Violations, Penalties & Fines