OFAC and Sanctions Compliance: Consider Early Action When Confronting COVID-19 Challenges

The Treasury Department this week (https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200420.aspx) reminded U.S. companies that compliance with international sanctions administered and enforced by the Office for Foreign Assets Control (OFAC) remains a priority, albeit with OFAC noting it is prepared to help companies deal with any special challenges that may arise due to COVID-19. As a reminder, OFAC enforces U.S. and international trade embargoes on certain countries, such as Iran, North Korea, and Syria and on certain sectors (such as the Russian oil and gas economy) and finally for certain actors (narco-traffickers and cyber criminals). Compliance with OFAC sanctions programs is a complex undertaking, involving know-your-customer diligence and a risk-based approach to vetting each party and transaction.

Recognizing that COVID-19 may pose challenges to companies with international supply chains, OFAC’s communication noted it encourages financial institutions and other businesses to contact OFAC “as soon as practicable” if there is any anticipation of a delay or complication in complying with any of the sanctions programs. This is particularly important for companies to keep in mind when they are obligated to file reports related to blocking and rejection of transactions and financial transfers (normally required within 10 days).

OFAC also encouraged self-disclosures to be submitted via emails rather than through physical mail. In its announcement, OFAC noted it has stepped up efforts to publicize exemptions and authorizations for humanitarian assistance under the comprehensive sanctions programs for Iran, North Korea, Venezuela, Cuba, and Russia/Ukraine.

We recommend as a best practice that any disclosures or communications with OFAC be done through counsel and be rigorously checked prior to submission. If you have any questions or concerns regarding any OFAC sanctions matters, please contact Guillermo Christensen, a partner in Ice Miller’s white collar practice in Washington DC office, or Dale Stackhouse, a partner in our business practice, based in Indianapolis. Guillermo, who served for 17 years in various roles in the U.S. intelligence community and the US Department of State, has extensive experience counseling clients in OFAC compliance and other national security regulations, and has also carried out internal investigations into export control and sanctions matters for U.S. and non-U.S. companies.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.