OFAC Penalties and Enforcement
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Dealing with Potential OFAC Violations: What Companies Need to Know
Hey there! The Office of Foreign Assets Control (OFAC) is the part of the US government that enforces economic and trade sanctions tied to foreign policy and national security. OFAC can slap civil penalties on people and companies that break its rules.I won’t lie – OFAC regulations can be tricky, even for folks with compliance programs. But if you discover a potential violation, you’ve got options to soften the blow. Let’s walk through how OFAC enforcement works and what you can do to mitigate penalties.
OFAC’s Enforcement Process
The OFAC Office of Compliance and Enforcement handles these cases. Here’s the usual playbook:
- Investigations from tips, referrals, etc.
- Issuing subpoenas to get more info
- OFAC lawyers review and determine if violations happened
- Settlement talks, including self-disclosure and other mitigating factors
- Public announcement of outcomes
OFAC has leeway in choosing penalties based on the specific situation. Settlements often include monetary fines and forfeiting funds from violations.
Civil Penalty Amounts
In many cases, civil fines for OFAC violations can top several million dollars. The exact amounts vary based on the sanctions program and violation type, and get adjusted for inflation each year.For instance, in 2022 the maximum per violation was:
- $311,532 for Cuban Assets Control violations
- $311,562 for global terrorist violations
- $311,562 for Foreign Narcotics Kingpin sanctions
Penalties usually factor in whether violations were intentional, awareness, harm caused, and sophistication of the company.
Factors That Can Reduce or Increase Fines
OFAC looks at mitigating factors that can decrease fines, like:
- Voluntary self-disclosure – this usually leads to way lower penalties
- Cooperation during investigations
- Fixing compliance programs to prevent future issues
- Small business status
But aggravating factors can drive up penalties, including:
- Intentional or reckless violations
- Awareness of the conduct
- Harm to sanctions program goals
- Sophistication of the company
- Warnings or notices from OFAC
- Repeat offenses or patterns of misconduct
- Obstructing the investigation
Requirements for Reporting Violations
US companies need to report all blocked transactions and property rejections to OFAC within 10 days. You also have to file annual reports on blocked property.OFAC provides guidance on proper reporting procedures and formats. Not complying with reporting rules can also lead to fines. But OFAC may lower fines if you voluntarily disclose reporting violations.
Criminal Penalties
On top of civil fines, willful OFAC violations can also lead to criminal fines and jail time. Criminal sanctions like prison are usually reserved for really serious violations, such as:
- Running a blocked entity
- Causing prohibited exports or re-exports
- Providing sanctioned groups with goods or services
Fines can be up to $1 million and jail time up to 20 years depending on the violations.
Real World Examples
To give you a sense of recent OFAC enforcements:
- JPMorgan Chase paid over $88 million to settle potential liability for 2,600 apparent violations tied to sanctioned countries and groups.
- MoneyGram paid $860,000 to settle potential liability for offering money transfers that violated Iranian sanctions.
- A former bank manager got 18 months in prison for conspiring to violate Iranian sanctions.
The bottom line: OFAC penalties can be severe, so take compliance seriously! Let me know if you have any other questions!