OFAC Sanctions Compliance Analysis for Business Plans

Oftentimes, we are approached by U.S. businesses, foreign subsidiaries of U.S. businesses, or independent foreign entities that wish to understand more about the application of United States economic sanctions to a particular contemplated course of business they are considering. In these cases, we provide a service called a compliance analysis. Our compliance analysis services range from a broad analysis of a contemplated course of business to a an analysis of a particular transaction. Here we will focus on compliance analysis for a general course of businesses, but you can learn more about what is involved in an analysis of a particular transaction here.

The Role of a Sanctions Compliance Analysis in Corporate Decision-Making

When a company is thinking about a contemplated course of business, it is very important for the entity to run that course of business through a cost and benefit analysis of possible profits and the expenses involved from a business perspective, as well as through their internal processes for risk management.

Oftentimes, when there is some nexus to United States economic sanctions, it makes sense for a company to reach out to sanctions counsel familiar with these regulations, or to an internal compliance division within their company. They should assess the degree to which their contemplated course of business is permitted under the sanctions and, if it is prohibited, to what extent it is prohibited.

The way sanctions may apply to a a business plan may impact the way that business, transactions, or payments are structured. We understand that changes in a business model can result in transactional costs and other externalities that may impact the decision making at the management level. For example, it is critical for a business to know whether they need to work with more expensive third parties who are more reliable in order to protect themselves from exposure to sanctions liability. This may, on the aggregate, result in the business not being as profitable and perhaps not worth the risk.

Understanding How Sanctions Apply to Your Business Model

This is a service we provide to clients across the world regarding different regions, different economic sanctions programs, regulations, and regimes. We must understand the way the client does business—not just the trends and habits of the industry. We need to consider the way the client’s business is set up and the way they interact with each other, particularly with a foreign subsidiary interacting with the United States company that is a parent company.

Crafting a Compliance Analysis Tailored to Your Company’s Business Plan

When we do a compliance analysis, we begin by crafting a request for information (RFI) which has a list of questions and request for documentation which gives us the information we need to conduct our analysis. At that point, we look at the particular contours of the client’s business model and cross reference it with the sanctions regulations.

It is important to understand that the sanctions regulations, although sometimes very broad or very specific, are not always clear. For this reason, the application of the economic sanctions to a particular type of business may not be a settled matter. It may be a matter purely of interpretation. In these cases, it may be recommended that a client submit a request for interpretive guidance.

A request for interpretive guidance is a separate product that allows a private citizen to file something with the OFAC requesting interpretive guidance as to the application of the economic sanctions to a particular type of business. When we draft a request for interpretive guidance for clients, we often make the argument to OFAC that a certain type of business falls under a general license and, in the event that OFAC disagrees with our interpretation, we request a specific license to authorize a transaction.

Giving Clients the Information They Need To Make Informed Decisions

A compliance analysis is an important first step for a range of sanctions services we provide to clients. It is the first step to understand precisely how the regulations apply to their business, their contemplated course business, and their existing practices in the company.

Along with the compliance analysis, we also draft a number of recommendations for things that can be done to help limit the exposure to sanctions liability. The recommendations may save money and costs down the road if the client wants to proceed with their business and any next steps required for them to have the authorization to do that type of business.

Contact Us To Learn More About Our Services

If you have questions about our compliance analysis services, please feel free to contact us to schedule a consultation. Whether you have a business plan in mind or if you merely want sanctions counsel on retainer for any future issues, we are available to discuss our products and what you can expect from the process.

The economic sanctions regulations can require transactions to involve certain contractual relationships, payment terms, and reporting requirements. We believe it is important for businesses to be fully informed on how the sanctions regulations may impact their allocation of resources and bottom line. Call today to learn more.