What advice would you give to someone going through the OFAC case process?
OFAC Attorney: That depends on whether the person is applying for a license, being investigated, or thinks they might have caused a violation that the agency hasn’t figured out yet. If a person is seeking a license to do a transaction, they would want to know (1) what goods, services, or technology they are dealing in, (2) who the parties are to the transaction, (3) why the transaction is going to take place, and (4) which banks are going to be used for the transaction. Then they would want to consult with an attorney who can perform due diligence and investigative work to make sure that they are allowed to carry out the transactions with the particular, goods, services, parties, and countries involved. Depending on what is appropriate, they can see if they qualify for a general license or they can submit an application to OFAC for a specific license to undertake that transaction.
If somebody has been served an administrative subpoena, the first step would be to get an attorney to prepare a subpoena response. They would not want to talk to the federal government during the course of an investigation without an attorney present, or at least without an attorney having reviewed the statements they are going to make to the government. Sometimes responses that have not been vetted by an attorney can expose people to even more liability. They would want to make sure that all their statements are carefully tailored to specifically respond to what the agency is asking, but nothing more unless the additional information are mitigating facts.
If a person thinks a violation has occurred, but OFAC has yet to detect the violation, it may be helpful to file a voluntary self-disclosure to OFAC. Filing a voluntary self-disclosure, or VSD, will usually lower the base penalty amount by half. Additionally, the agency looks favorably upon cases where a person files a full and complete VSD. VSDs help further OFAC’s mission because it brings to their attention violations that might have gone unnoticed. They also save the agency enforcement resources.
What is OFAC?
OFAC Attorney: OFAC is the Office of Foreign Assets Control. It is an agency within the U.S. Department of the Treasury that is tasked with enforcing, administering, and implementing U.S. economic sanctions. OFAC has a licensing branch that helps U.S. persons obtain licenses for transactions that might otherwise be prohibited. They have a compliance branch that primarily deals the banks and makes sure that banks are complying with financial regulations. They have an Office of Enforcement, which primarily investigates all other non-banker violations, for example businesses and individuals. They also have the Office of Global Targeting, which investigates, gathers intelligence on, and builds cases against people, entities, or organizations that might one day appear on the Specially Designated Nationals (SDN) List.
Who brings these types of cases?
OFAC Attorney: It depends on the circumstances of the case. OFAC doesn’t have agents out in the streets looking for violations. They primarily depend on other federal agencies to investigate their violations, so a case could start with the FBI, for example. That is very common. A case could also start with Customs and Border Protection if goods gets seized coming into or going out of the country. Cases can start with the Department of Homeland Security’s Homeland Security Investigations unit. They might initiate an investigation after observing something that doesn’t look right. Another agency that can bring an action would be the Department of Justice through its various U.S. Attorney’s offices. The U.S. Attorney can investigate an issue and prosecute a case criminally. There are many ways in which the federal government can detect a client’s activities that could lead to a violation of the sanctions regulations.