OFAC provides a matrix of common risk factors related to disbursing funds or facilitating transactions for financial institutions. The risk matrix provides certain elements and attributes of a transaction and determines whether they are low-risk, medium-risk or high-risk.
For example, these risk matrixes review various compliance measures to determine if an entities’ level of compliance is up to OFAC’s standards. This involves reviewing the risk matrix as to what would allow financial institutions and entities to determine whether they are engaging in a low, medium or high-risk transaction, and whether they should seek legal guidance from a sanctions attorney or educate themselves as to compliance measures.
Charitable Sector Risk Matrix
The charitable sector risk matrix allows charities to review certain risk factors for disbursing funds or resources to grantees. For example, a high-risk grantee would be someone they have no prior history with, whereas a low-risk one would already have an existing relationship with the charity. It would be low-risk for a charity to perform an onsite grantee due diligence, whereas it would be high-risk if they performed no grantee due diligence or due diligence that was random or inconsistent.
Those risk matrixes were made to allow a charity to protect themselves from abuse from sanctioned parties or bad actors that are not intended to be covered by the work the charity engages in. However, abiding by the risk matrix does not necessarily mean a charity is in compliance with local, state, or federal law, and it is still important to speak with an OFAC sanctions attorney about all the transactions they are engaging in that may incur sanctions liability.
How an OFAC Sanctions Attorney Could Help
An OFAC sanctions attorney could help by reviewing prospective transactions, donations, exports, or imports. They could review the risk matrix and identify certain risk factors that would indicate that an entity needs to take measures to ensure compliance with the law. Based on the risk matrix assessment, an attorney may also advise that an entity perform due diligence or conduct more research on who they are engaging in business with, the transaction itself, and the end-users involved. The risk matrix also would show if there is a need for any kind of enhanced due diligence or a software review of the transaction using artificial intelligence.