Who OFAC's rules reach
The Office of Foreign Assets Control, part of the U.S. Treasury Department, administers economic sanctions programs that block the property of listed persons and restrict dealings involving certain countries and regions. The rules bind U.S. persons, a term that includes U.S. citizens and permanent residents wherever they are, companies organized in the United States, and anyone physically in the country, and some programs also reach foreign subsidiaries of U.S. companies. Non-U.S. companies are not outside the picture: a transaction that causes a U.S. bank or other U.S. person to violate the rules, including a dollar payment cleared through the United States, can create exposure of its own. Civil penalties can apply even without knowledge of the violation, so good intentions are not a complete answer.
Where name screening falls short
Running names against the Specially Designated Nationals list is the familiar step, but it is not the whole job. OFAC treats an entity as blocked when blocked persons own it at or above a set threshold, alone or together, even if it is never listed, and recent guidance warns that control or a retained interest can matter below that line, so ownership has to be traced. Country and regional programs can prohibit dealings with no named party involved at all. A U.S. person can also be liable for facilitating a foreign party's transaction that the U.S. person could not do directly, which can catch managers who approve deals from the United States. Keep records of screening results, ownership research, and the reasons for each decision, because OFAC expects records to be kept and has recently lengthened how far back enforcement can reach.
First steps for a business
Our first review maps where your customers, suppliers, banks, and payment flows touch sanctioned jurisdictions or listed parties, and we compare that with how you screen today. Some activities that look prohibited are authorized under general licenses that OFAC publishes, while others need a specific license applied for in advance. If the review turns up a past transaction that may have been a violation, we discuss whether to make a voluntary self-disclosure, which OFAC's enforcement guidelines treat as an important mitigating factor, and how to stop the activity going forward. OFAC compliance looks different for a trading company than for a software business, and the plan we discuss should fit the risk you actually have.
