OFAC Sectoral Sanctions

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 program. For more information on the recent changes, contact a skilled 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 would be prohibited by 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.

Benefit of an Attorney

An OFAC attorney can give the person a detailed analysis of the current law, how it relates to OFAC sectoral sanctions, and the proper steps moving forward to obtain the best results for the client. 

If the client attempts to obtain a specific license without an OFAC attorney, they are risking rejection from OFAC and then has an even bigger barrier than what is already in place to obtain a specific license. Individuals should retain an OFAC attorney for such matters even though there are forms online to submit a person’s OFAC license.

The common person is not going to be able to grasp in detail how their specific instance relates to the current law, and will not have experience convincing OFAC that the specifically prohibited transaction should be authorized by OFAC in the potential client’s specific situation.