What are OFAC Regulations and what does OFAC do?
The Office of Foreign Assets Control was founded in December 1950 and it oversees the transactions and economic sanction programs mainly against targeted countries. Sanctions may vary, from restricting the trades and blocking of assets to achieve national security goals.
All U.S citizens permanent residents and entities within the United States are strictly required to comply with OFAC regulations. Foreign subsidiaries and programs controlled and owned by U.S companies also need to comply.
Prohibited Transactions and Blocked Assets
Certain financial transactions or trades and other dealings are strictly prohibited for U.S persons to engage with unless they obtain permission from OFAC Regulations. Different sanction programs consider different foreign country policies and national security goals.
As required by the U.S law, any bank accounts and assets owned and operated by an OFAC-specific country, individual or entity should be blocked.
Bank transactions containing the following factors are blocked:
- By a blocked entity or individual,
- Transactions that passes through, goes through a blocked individual,
- Transactions with connection to the blocked individuals.
- The following economic activities, trades and transactions are prohibited under OFAC compliance regulations.
- Making new investments in a country that is blocked or in property that a blocked government or Specially Designated National (SDN) owns, controls, or has an interest in.
- Initiating an investment in an SDN property or any blocked country.
- Exporting and importing services or supplies to a blocked country or those individuals part of the Specially Designated Nationals list.
- Selling and supplying (directly or indirectly) services or products to a blocked country or individuals.
- Facilitating any transactions regarding products or services that originates from a blocked country.
- Providing funding or financial assistance to any persons, entities listed in the SDN list.
At the moment, OFAC sanctions are directed towards countries and organizations with history involving terrorism, proliferation of weapons of mass destruction and international drug trafficking.
Applying for a Specific License
OFAC can provide specific general licenses to those who would like to perform transactions with sanctioned countries under very specific considerations and on a case to case basis.
OFAC issues a specific document to authorize a transaction that is generally not allowed. However, this specific license is only valid for a limited period. Applications for a specific license should be submitted to OFAC to determine if these transactions are in line with the internal licensing policies, U.S foreign policies.
Specially Designated Nationals and Blocked Persons
Released by OFAC, this list contains the names of individuals and companies owned, operated, and controlled by, or acting for or on behalf of, targeted countries. The SDN list is always updated with new entries being added from time to time.
Terrorist individuals, groups, and narcotics traffickers are listed here, not country specific. Transacting with their assets is prohibited. If a person is listed as SDN, all their assets are blocked. Ownership is defined as 50% or more of direct or indirect ownership in a property.
Under OFAC Regulations it also oversees the following economic sanctions programs:
- Balkans-Related Sanctions
- Belarus Sanctions
- Burma Sanctions
- Central African Republic Sanctions
- Cote d’Ivoire (Ivory Coast) Sanctions
- Counter Narcotics Trafficking Sanctions
- Counter Terrorism Sanctions
- Cuba Sanctions
- Democratic Republic of the Congo-Related Sanctions
- Iran Sanctions
- Iraq-Related Sanctions
- Former Liberian Regime of Charles Taylor Sanctions
- Libya Sanctions
- Magnitsky Sanctions
- Non-Proliferation Sanctions
- North Korea Sanctions
- Rough Diamond Trade Controls
- Somalia Sanctions
- Sudan Sanctions
- South Sudan-Related Sanctions
- Syria Sanctions
- Transnational Criminal Organizations
- Ukraine-Related Sanctions
- Yemen-Related Sanctions
- Zimbabwe Sanctions
International businesses dealing with trade and economic transactions are expected to do all their best in ensuring that their businesses are not dealing with any persons or entities listed in the SDN or not a country subject to OFAC sanctions. OFAC regulations are strictly implemented and any violation is dealt with seriously and accordingly.