U.S. Department of the Treasury Office of Foreign Assets Control

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U.S. Department of the TreasuryOffice of
Foreign Assets Control
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Agenda

• What is OFAC?
• Legal Authority for U.S. Sanctions
• Sanctions Programs
• Specially Designated Nationals (SDNs) and Blocked
  Persons
• Country Programs
• OFAC Fact and Fiction
• Penalties and Consequences
• Effective Compliance Strategies

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What is OFAC?

• Office of Foreign Assets Control (OFAC)
• U.S. Department of the Treasury
• OFAC administers and enforces economic and trade
  sanctions against targeted
• - Foreign governments (e.g. Iran, Sudan, Cuba)
• - Individuals (e.g. terrorists, narcotics
  traffickers)
• - Entities (e.g. drug front companies,
  charities linked to terrorist groups)
• - Practices (e.g. trade in non-certified rough
  diamonds, proliferation of WMD destruction)

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Legal Authority for U.S. Sanctions
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Legal Authority

• Primary legal authority for OFAC includes
• Trading with the Enemy Act (TWEA)
• International Emergency Economic Powers Act
  (IEEPA)
• Antiterrorism and Effective Death Penalty Act
• Foreign Narcotics Kingpin Designation Act

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Jurisdiction Individuals

• American citizens and permanent resident aliens
  located anywhere in the world

• Any individual, regardless of citizenship, who is
  physically located in the United States

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Jurisdiction Businesses

• Corporations organized under U.S. law, including
  foreign branches of U.S. companies and
  foreign-organized subsidiaries of U.S. companies
  (for Cuba and North Korea only)
• Any corporation or company physically located in
  the United States, including U.S. branches,
  agencies and representative offices of foreign
  corporations

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Comprehensive Sanctions Programs

• Current Comprehensive Sanctions Programs
• Cuba
• Iran
• Sudan

• See OFACs website for details on each of these
  programs www.treas.gov/ofac

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Comprehensive Sanctions Programs

• In general the following are prohibited under
  comprehensive sanctions programs
• Exports (direct or indirect)
• Imports (direct or indirect)
• Trade brokering, financing, or facilitation
• Investment
• Any transaction involving any property or
  interest in property of a sanctioned government
• Applies to most goods, technology, and services

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Specially Designated Nationals

• Specially Designated Nationals (SDNs)
• Individuals and entities all over the globe
• Owned, controlled by or acting on behalf of
  targeted governments or groups
• May be front companies, parastatals, high-ranking
  officials or specifically identified persons
• Designated terrorists or narcotics traffickers

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Specially Designated Nationals

• Over 3,000 unique SDNs and blocked persons
  identified by OFAC
• Published and accessible on
• Federal Register
• http//www.treas.gov/offices/eotffc/ofac/sdn/index
  .html

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Specially Designated Nationals

• Al-Hamati Sweets Bakeries (SDGT)
• Usama Bin Ladin (SDT/SDGT)
• Mamoun Darkazanli Import-Export, Germany (SDGT)
• Myanma Foreign Trade Bank (BURMA)

• Holy Land Foundation for Relief and Development
  (SDGT)
• Farmacia Vida Suprema (SDNTK)
• Treviso Trading Corporation, Panama (CUBA)

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Limited Sanctions Programs
OFAC enforces and administers limited sanctions
programs targeting

• Balkans
• Burma/Myanmar
• Iraq
• North Korea

• Nonproliferation
• Syria
• Zimbabwe

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OFAC Fact or Fiction?
OFACs inception and regulations are tied to the
events of 9/11 and the USA PATRIOT Act
FICTION
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OFAC Fact or Fiction?
Persons under OFAC jurisdiction MUST screen all
transactions against the SDN List
FICTION
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OFAC Fact or Fiction?
OFAC programs specifically target state
government or other industries
FICTION
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OFAC Fact or Fiction?
OFAC regulations include a de minimis amount, so
that certain low value transactions are exempt
FICTION
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OFAC Fact or Fiction?
OFAC prohibitions only cover certain kinds of
transactions, such as wire transfers or ACH
payments
FICTION
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OFAC Fact or Fiction?
OFAC programs only target terrorists
FICTION
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Penalties and Consequences

• Criminal Penalties
• Up to 10 million and 30 years in jail
• Civil Penalties
• Trading With the Enemy Act 65,000
• International Emergency Economic Powers Act
  11,000
• Iraqi Sanctions Act 325,000
• Foreign Narcotics Kingpin Designation Act
  1,075,000
• Anti-Terrorism and Effective Death Penalty Act
  55,000
• Violations may result in
• Blocked funds and seized goods
• Negative publicity and loss of business good
  will

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Effective Compliance Strategies

• Screen all transactions for sanctions references
• Screen against sanctioned countries, including
  cities and territories within such countries.
• Screen all parties connected with transaction

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Due Diligence

• Is the hit against the OFAC SDN list?
• Organization vs. individual vs. vessel?
• Is it a full name match?
• Have you gathered enough information to compare?

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Example 1

• Your potential customer
• Arnulfo Marquez ABC Import-Export Limited POB
  Chiapas, Mexico US Citizenship SSN 222-22-222
• Similar to the OFAC SDN listing
• TREJOS MARQUEZ, Arnulfo, Carrera 4 No. 9-17 of.
  308, AA 38028, Cali, Colombia c/o CONSTRUCTORA
  TREMI LTDA., Cali, Colombia Cedula No. 6090595
  (Colombia) (individual) SDNT

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Example 2

• Your potential customer
• CIMEX N.V., Antwerp, Belgium
• Similar to the OFAC SDN listing
• CIMEX (a.k.a. CIMEX CUBA a.k.a. COMERCIO
  INTERIOR, MERCADO EXTERIOR a.k.a. CORPORACION
  CIMEX S.A.), Edificio Sierra Maestra, Avenida
  Primera entre 0 y 2, Miramar Playa, Ciudad de la
  Habana, Cuba and all other locations worldwide
  CUBA

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Example 3

• Your potential customer
• Abubaker Ahmed DOB 1 Aug 1970 Address Dar es
  Salaam
• Similar to the OFAC SDN listing
• AHMED, Abubakar K. (a.k.a. GHAILANI, Ahmed
  Khalfan a.k.a. KHALFAN, Ahmed a.k.a.
  MOHAMMED, Shariff Omar) DOB 14 Mar 1974 alt.
  DOB 13 Apr 1974 alt. DOB 14 Apr 1974 alt. DOB 1
  Aug 1970 POB Zanzibar, Tanzania citizen
  Tanzania (individual) SDGT

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Effective Compliance Strategies

• Make sure your sanctions information is
  up-to-date!
• Sanctions and SDN list can be updated or revised
  at any time
• Updates not on a regular basis
• Set your browser to automatically check the OFAC
  web site for updates
• Subscribe to email notification service on OFAC
  home page

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Effective Compliance Strategies

• Make sanctions compliance an integral part of
  your business
• Dont treat OFAC compliance as an afterthought
• Ensure that all employees are familiar with U.S.
  sanctions
• Make compliance a part of training program for
  new hires

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Effective Compliance Strategies

• Take advantage of OFAC compliance resources
• OFAC publishes an extensive library of on-line
  reference manuals, brochures etc.
• These and other useful materials are available
  free of charge through
• OFACs web site http//www.treas.gov/ofac
• OFACs automated fax on demand service 202-
  622-0077

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For compliance counseling

• 202-622-2490 or 1-800-540-6322
• Monday through Friday 8 a.m. to 700 p.m EST
• www.treas.gov/ofac

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• Hans Huber
• Compliance Programs Division
• Tel [phone] or
• 1-800-540-6322
• Fax [phone]
• Web www.treas.gov/ofac