Before filing a voluntary self-disclosure, it is vital to contact an OFAC sanctions attorney who is familiar with the economic sanctions in order to properly evaluate the underlying facts of what occurred and provide recommendations as to the next steps. Additionally, the attorney needs to be familiar with regulatory compliance when filing a voluntary self-disclosure because it is an opportunity for advocacy before OFAC.
A company may want to file a voluntary self-disclosure with OFAC in the case that the entity or individual believes:
- an employee inadvertently violated the sanctions,
- they were transacting with a close nexus to a sanctions issue,
- or are unsure if they took sufficient compliance steps.
A voluntary self-disclosure is an in-depth process that often requires internal investigations, audits, an analysis of the sanctions, and how they apply to a business. This can require the review of numerous or hundreds of documents to understand what took place so it is important to work with someone with experience in this area.
When reviewing the facts in the voluntary self-disclosure, the facts of what took place should be accompanied with legal and policy arguments as well as an analysis of the OFAC enforcement guidelines and how they may apply to the case.
The OFAC enforcement guidelines are used to determine the penalties that may be involved with the violation, however, they may not impose any civil penalties. It also possible that OFAC may issue a cautionary letter, find no violation, or take no action at all.
When filing a voluntary self-disclosure, the company will gain a voluntary self-disclosure credit which reduces the maximum penalties by 50 percent. However, the voluntary self-disclosure credit only works when they are able to file the voluntary self-disclosure before any violation is reported by another actor.
Typically, filing a voluntary self-disclosure is done in two steps. The first step is when the company decides to move forward with the voluntary self-disclosure and hires sanctions counsel. The OFAC sanctions attorney and entity will file an initial voluntary self-disclosure which discusses the very general issues and the fact that an entity realizes that it may have been involved in a potential sanctions violation and has hired counsel, is conducting an internal investigation, and within a reasonable amount of time will follow-up with the supplemental information to OFAC.
At this point, the internal investigation and the audits take place as necessary and the voluntary self-disclosure is crafted. It is also important to note that if a financial institution or other actor has an obligation to report to OFAC, sends a report to OFAC, and OFAC receives that report of the violation before they receive the voluntary self-disclosure, the company may lose its voluntary self-disclosure credit.