Increased Sanctions and OFAC Penalties

August 21, 2019

The U.S. government has turned up the heat on countries facing sanctions and in the penalties for those who violate the sanctions.

U.S. President Donald Trump recently ordered the blocking of government of Venezuela assets in addition to sanctions announced previously. Meanwhile, fines issued by the U.S. regulator enforcing sanctions compliance have also hit a decade high at a time when the Trump administration is increasingly using sanctions as a foreign policy tool.

OFAC settlements surpass $1.28 billion

A total of $1.28 billion in total penalties have been issued by the Treasury Department’s Office of Foreign Assets Control (OFAC) so far this year.

The 19 settlements so far this year eclipse the total issued in all of 2018, when there were just seven settlements worth $71.5 million. Major settlements with Standard Chartered PLC ($657 million) and UniCredit Bank ($611 million) lead the 2019 figures.

The decade’s previous full-year high of $1.205 billion in fines in 2014, when there were 22 cases settled.

The U.S. this year has ramped up pressure on the government of Nicolás Maduro in Venezuela by announcing in August the blocking of all government-owned property.

“All property and interests in property of the Government of Venezuela that are in the United States, that hereafter come within the United States … are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in,” said a statement signed by Trump on Aug. 5.

At the same time, OFAC released a statement saying the “sanctions are designed to limit the Maduro regime’s sources of revenue and hold accountable those who stand in the way of restoring democracy in Venezuela, while also ensuring that the flow of humanitarian goods and services to the Venezuelan people is not prohibited by U.S. sanctions.

Earlier sanctions imposed on oil

Earlier this year, the U.S. blacklisted the country’s military counterintelligence agency and state-owned oil giant. The U.S. also has imposed sanctions on Iran following Trump’s decision to withdraw the U.S. from the Iran nuclear deal.

“It speaks more to the fact that we had a lot of cases this year that were ripe and were ready to be issued,” said Sigal Mandelker, Treasury’s undersecretary for terrorism and financial intelligence, in a recent interview with the Wall Street Journal.

Dos and Don’ts to avoid sanctions

While Venezuela is at the top of the current list for OFAC Sanctions, there are several countries facing U.S. sanctions and many more individuals who are on sanctions lists. The lists are constantly changing, meaning organizations have to keep on top of the screening process.

Erich Ferrari, an attorney  for Ferrari & Associates, P.C. who specializes in OFAC matters, recently wrote about the OFAC framework,  spelling out its common causes for sanctions violations in easy to understand dos and don’ts:

Do: Have an OFAC sanctions compliance program.

Do: Consult legal counsel or OFAC sanctions expertise.

Don’t: Refer business opportunities to, or approve or facilitate those opportunities of, your company’s foreign based operations.

Don’t: As a non-U.S. person, re-export U.S.-origin goods, services, or technology to sanctioned jurisdictions or sanctioned persons.

Don’t: As a non-U.S. person, cause U.S. dollar payments to be remitted through the U.S. or by U.S. persons for transactions that in any way involve sanctioned persons or jurisdictions.

Do: Make sure that your sanctions screening software and filters are adequate, continuously tested, and calibrated.

Do: Good due diligence. Don’t slack on the quality of your due diligence.

Do: Follow OFAC’s Framework and ensure that your sanctions compliance program is addressing sanctions-risk globally.

Don’t: Engage in strange payment practices.

Don’t: Be the person at your company that comes up with a novel way to “get around” the sanctions.

Ensure you know who you are doing business with by conducting thorough sanctions screening. Learn how Alessa can help with that ongoing task by contacting us today.

About Anu Sood

Anu Sood (LinkedIn | Twitter) is the Director of Marketing at CaseWare RCM and is responsible for the company’s global marketing strategy. She has over 20 years of experience in product development, product management, product marketing, corporate communications, demand generation, content marketing and strategic marketing in high-tech industries.

Try Alessa