OFAC sectoral sanctions are a new category of sanctions. The US has had secondary sanctions, list-based sanctions, and country-based sanctions, but this is the new category that OFAC introduced and began using in the Ukraine-related Sanctions and arguably in a more targeted fashion the Venezuela-related Sanctions. For more information on the recent changes, contact a sectoral sanctions attorney who can try to answer any questions or concerns you may have.
Sectoral vs. Traditional Sanctions
The difference between OFAC sectoral sanctions and traditional sanctions is the entities on a sectoral sanctions identification list are not subject to blanket prohibitions. In fact, citizens of the United States are prohibited from engaging with those persons in sectoral-specific transactions.
The Ukraine-related sanctions program was the first of its kind to have sectoral sanctions and it specifically targeted Russia’s financial and energy sectors.
Specific types of transactions, such as financial and energy-related transactions, are prohibited for US persons and, like the Venezuelan sanctions, the OFAC 50 percent rule is strictly enforced in the context of the Ukraine-related sectoral sanctions.
Defining Compliance Programs
Experienced attorneys recommend that entities engaging the Russian financial and energy industries have a sanction compliance program in place to be able to preemptively identify transactions that may be prohibited by the U.S. government through OFAC.
Sometimes, potential clients believe that compliance is easily accomplished because OFAC has online forms, but applying for specific licenses requires a lot of due-diligence and a lot of legal research. One should consider a specific license as something similar to a court document, a legal brief that an attorney would submit in a criminal defense matter.
When a person is prosecuted criminally, they are given the option of defending themselves without an attorney so long as they waive that right to counsel. In these OFAC-related instances, the person is essentially doing the same thing by submitting an OFAC specific license without the assistance of an OFAC attorney.