Six OFAC Sanctions Defense Strategies

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Brian Kuester
Attorney Brian Kuester
OFAC Sanctions Defense Team Lead
Former US Attorney
Former District Attorney
Ellen Comley
Attorney Ellen Comley
OFAC Sanctions Defense Team Lead
Senior Counsel
Roger Bach
Roger Bach
OFAC Sanctions Defense Team Consultant
Former Special Agent (OIG)

If you or your company has been accused of violating U.S. economic sanctions by doing business with a foreign national that is on the Specially Designated Nationals and Blocked Persons List (SDN list), you need to take your defense seriously. The penalties of a conviction are severe. Even if you can show that the violation was not willful, the Office of Foreign Assets Control (OFAC) at the U.S. Department of the Treasury can still pursue a civil case that carries massive financial repercussions for you or your company.

The OFAC defense and compliance lawyers at The Criminal Defense Firm have represented numerous clients through a wide variety of legal issues associated with OFAC and its enforcement of U.S. sanctions on foreign nationals. Armed with our vigorous and savvy defense strategies, we aim to help even more suspected sanctions violators invoke their rights and protect their interests against groundless allegations of wrongdoing in 2023.

There are Defenses You Can Raise Against Allegations That You Violated OFAC Sanctions

OFAC enforces the economic sanctions that the President of the United States has imposed on America’s enemies and other parties that imperil the country’s foreign interests. These include:

  • Individual terrorists and terrorist organizations
  • International provocateurs
  • Global pariahs
  • Drug traffickers and cartels
  • Warmongers
  • Human rights abusers and violators

If you have been subjected to an OFAC investigation for allegedly violating these sanctions and trading with one of these groups of people and entities, you need to invoke your rights and raise an effective legal defense before things get worse.

Six of the most common defenses to an OFAC allegation that you violated sanctions are:

  1. Presenting evidence that you complied with the sanctions
  2. You had a general or specific license to do business with the sanctioned party
  3. The violation was not willful
  4. Your compliance efforts were exhaustive
  5. The sanctioned party was newly-added to the SDN list
  6. The sanctioned party went to extraordinary means to hide their identity

Some of these are only partial defenses, though, and only serve to mitigate the damages of a judgment against you or your company. Wherever possible, complete defenses should be used.

1. You Complied with the Sanctions

The best defense that you can make is that you did not actually violate any sanctions. This often involves providing OFAC with full business records that do not include any payments or receipts from the sanctioned party or from any of their intermediaries. However, if OFAC has isolated specific transactions that it claims were in violation of U.S. economic sanctions, this defense would focus on those records and show that the business partner was someone other than who OFAC believes it to be.

2. You Had a License to Do Business with the Sanctioned Party

In some cases, domestic companies can obtain a license to do business, or a limited amount or type of business, with a foreign national who is otherwise under economic sanctions. OFAC may issue these licenses in spite of the sanctions in order to provide humanitarian relief or to preserve important American assets, resources, or imports or exports.

It is not uncommon, however, for OFAC to communicate poorly internally and claim that your business dealings under the license are in violation of economic sanctions. It is also not uncommon for the agency to allege that your company is exceeding the scope of the license.

Showing that you have a license to do the business that you are doing, and that it is the only business that you are doing with the sanctioned party, can be a strong defense.

3. The Violation Was Not Willful

If OFAC believes that a violation of U.S. economic sanctions was a willful one, it will refer the case to the U.S. Department of Justice (DOJ) for criminal prosecution. While criminal cases still carry massive fines for each alleged violation of sanctions, they also carry up to multiple decades in prison for responsible individuals.

By showing that the violation of U.S. sanctions law was not willful, you can prevent the case from escalating into a criminal one. However, it is a partial defense in that it tacitly admits that the violation occurred. This will subject you to the penalties of a civil case brought by OFAC, which can still carry crippling financial penalties.

Nevertheless, in some cases it can still be in your best interests to focus on mitigating the damages rather than trying to completely beat the case. An experienced OFAC defense lawyer will be able to help you make an informed decision on how to proceed.

4. Your Compliance Protocol is Extensive

Another partial defense is that your OFAC compliance protocol is extremely thorough. This defense implies that you did all that you could reasonably do to prevent the violation, but it happened anyway.

Often deployed in tandem with the lack of willfulness defense, this can drastically reduce the penalties that OFAC chooses to pursue. If you can persuade the agency that harshly penalizing your firm would run against its primary interest in encouraging compliance from other domestic companies, it can mitigate the damages of the case.

5. Sanctions Were Only Just Imposed

Another way to persuade OFAC to go easy on you is to show that the sanctions violation concerns a party that was only just added to the SDN list. By arguing that you acted to prevent the violation, but just not fast enough, OFAC may be persuaded into reducing the penalties they impose.

6. The Sanctioned Party Went to Great Lengths to Do Business With You

In many economic sanctions cases, the sanctioned party was savvy and took extensive precautions over a long period of time to hide their true identity and gain your trust before initiating the business venture. OFAC understands that sanctioned parties can be difficult or nearly impossible to identify, especially if they use multiple layers of intermediaries to mask who they are. When they recognize the uphill battle that you faced in avoiding a sanctions violation, they may go leniently on you.

Conduct an Audit Before Choosing a Defense Strategy

While some of these defense strategies dovetail over each other, many are exclusive to one another. For example, arguing that you both had a license to conduct business with the sanctioned party and also that you did not wilfully engage with them would be self-contradictory and would completely undermine your defense.

It is extremely important to choose which defense strategy will be the best to pursue in your given circumstances.

The way to do that is to conduct an internal audit concerning the alleged violation, first. This will uncover the evidence that OFAC has likely already uncovered, or will be likely to find as the case develops and discovery progresses. Based on this information, you can see which defense strategies have pitfalls and can make an informed decision on how to proceed.

Frequently Asked Questions About The Criminal Defense Firm and OFAC Defense

What are the Penalties of a Sanctions Violation?

The penalties for violating U.S. sanctions and dealing with a blocked foreign national depend on two things:

  1. Whether the alleged violation was willful, and
  2. The law authorizing the sanction.

If the violation was willful, the case will be prosecuted by the DOJ as a crime. A conviction will carry steep fines as well as the potential for decades behind bars. If the violation was not willful, though, OFAC will pursue a civil case that also carries massive financial penalties, but no prison time.

Note that the difference is whether the violation was “willful” or not. You can face a civil OFAC case even if the violation was accidental, inadvertent, or unknowingly done.

The precise prison sentence and fines will depend on the statute that authorizes the sanction. They can range quite widely. For example, in 2023, civil cases for violations of sanctions under the Clean Diamond Trade Act carry up to $16,108 in fines per violation, while violating a sanction imposed under the authority of the Foreign Narcotics Kingpin Designation Act carries up to $1,771,754 in fines per violation.

In addition to these civil and criminal penalties, there is also the bad publicity that these cases bring with them. This can tarnish your company’s reputation in ways that are difficult to overcome.

What Does it Mean to be a National Law Firm?

The Criminal Defense Firm is a national law firm. While our main law offices are in Houston and Dallas, Texas, we also have other law offices in major cities across the country.

What Other OFAC Services Do You Provide?

The Criminal Defense Firm provides legal guidance for all stages of OFAC compliance and defense. This includes:

In many cases, these compliance efforts are successful enough that you will never have the need for an OFAC defense lawyer.

Why Don't You Call Yourselves the Best OFAC Defense Firm?

We do not call ourselves the best because we think that these kinds of statements mean far more when they come from our prior clients. Read their testimonials here.

The Criminal Defense Firm: OFAC Defense Across the U.S.

The OFAC defense lawyers at The Criminal Defense Firm help companies across the U.S. challenge allegations that they violated U.S. economic sanctions against blocked foreign nationals.

Call their national law offices at (866) 603-4540 or contact them online if you need effective OFAC defense.

Dallas 214-817-2053
Houston 713-454-7814
Detroit 313-634-0925
Baton Rouge 225-269-8749
New York 332-239-7345
Winter Park 407-890-0460
Miami 786-751-3247
Portland 207-222-7742
Nationwide 866-603-4540