In theory, screening of restricted parties, such as the League of Nations, is simply by comparing the names of the restricted parties in a proposed transaction with the lists of the restricted parties in question. In reality, however, filtering restricted parties in a modern company can be a more complex task, especially for companies that sell in multiple countries with multiple branches, products, and business practices. Problems that arise include dealing with commonly used names, spelling variants, fictitious names, false positives, and the regular addition of names to lists. In addition to listing individuals and entities on the SDN list, OFAC also lists vessels that have been used to circumvent sanctions, and U.S. parties are prohibited from chartering such vessels. Similarly, OFAC recently imposed sanctions on an American. Company for the conclusion of a contract with a foreign company, in which the manager who signed the contract for the foreign company was on the SDN list, but not the foreign company. These and other issues complicate the selection process and make it important to plan the process well. Issues to consider when designing an appropriate selection process for your business include: Jurisdictions become the target of U.S. sanctions through executive orders signed by the President of the United States (“the President”). Individuals can become the target of U.S. sanctions by being named in executive orders or through the exercise of the delegated powers of the PRESIDENT of OFAC (where the President establishes criteria for the imposition of sanctions), in consultation with the U.S. Department of State and sometimes other agencies (such as the U.S.

Department of Justice (“DOJ”)). OFAC also has primary responsibility for licensing transactions that would otherwise be prohibited by U.S. sanctions. In addition, OFAC has the authority to investigate and impose civil fines on individuals (including non-U.S. persons) who violate U.S. sanctions laws and regulations. [36] However, even in the case of domestic programs where the U.S. company`s foreign subsidiaries are allowed to conduct transactions with countries subject to global sanctions, the U.S. parent company and its U.S. employees are strictly prohibited from engaging in such transactions, including aiding, approving, providing products/components, technology, financing and management support for these transactions. See section C.7 below.

Therefore, U.S. companies should be cautious when identifying situations where sanctions requirements may arise across their operations. Individuals who conduct international commercial, commercial, or financial transactions must exercise due diligence to ensure that the person or entity with whom they do business is not on the SDN list or is not a country subject to U.S. economic sanctions. Compliance with OFAC regulations is a strict responsibility, which means that ignorance of the law or facts does not excuse non-compliance. Your site export control officer can work with you to determine if an exception or exception applies to your planned activities or if a general license is available. Under OFAC sanctions, there is an exception for the export or import of information and information material, regardless of format or medium. This exception does not apply to export-controlled technical data or information materials that have not been fully created and exist at the time of the transaction, or to the content or artistic modification or enhancement of the information materials. See, for example, § 560.210 of Iran`s Settlement on Transaction-Free Transactions and Sanctions.

There is also an exception under OFAC sanctions related to peer review activities. See, for example, § 560.538 of iran`s Provisions on Transactions and Sanctions relating to Authorized Transactions that are necessary and generally relevant for publication. OFAC regularly publishes guidelines and FAQs on sanctions restrictions and compliance expectations on its website. In addition, in May 2019, OFAC released “A Framework for OFAC Compliance Commitments,” which outlines the elements of an effective sanctions compliance program – for U.S. and non-U.S. citizens. Enterprise – organized around five “core compliance components”: (i) management engagement; (ii) risk assessment; (iii) internal controls; (iv) audit and audit; and (v) training. OFAC is primarily responsible for investigating and enforcing violations of civil economic penalties. OFAC maintains more limited sanctions against a number of other countries where sanctions may apply depending on the entity/individual/organization/purpose/industry (i.e., sectoral sanctions). These countries are: [23] For example, under the AEOI, the Bureau of Industry and Security regulates transactions with many countries subject to OFAC sanctions under Part 746 of the 15 CFR (embargoes), including Iran, Syria, Russia, Cuba, Iraq, North Korea, Iran, and Crimea. Similarly, the AEOI imposes restrictions on transactions with Russia that are separate from OFAC Russia`s requirements, including sanctions on the Russian industrial sector under 15 CFR § 746.5, restrictions on relations with certain Russian parties under 15 CFR § 744.10, and restrictions on the treatment of military end-use and military end-users in Russia under 15 CFR § 744.21. In addition, as mentioned above, the president could be tasked with imposing additional Russian sanctions under CAATSA in the future.

In addition, the BIS maintains three shortlists that need to be reviewed in addition to the restricted party lists by OFAC (which include many Russian individuals and organizations). The most recent enforcement case involving ZTE Corp. was jointly initiated by the BIS and OFAC for violating AEOI and OFAC sanctions. [22] Penalties for violations include civil and criminal penalties. Criminal penalties include up to twenty years in prison, fines of $1,000,000, or both per violation. Civil penalties can be up to $307,922, double the amount of the underlying transaction per violation, subject to adjustment under the Federal Civil Penalties Adjustment Act. OFAC has a robust enforcement service that initiates civil enforcement cases. In addition, the U.S. Department of Justice in Washington, D.C. and U.S. lawyers prosecute sanctions violations, sometimes in connection with OFAC or independently of the agency.

Judicial review of OFAC provisions is permitted in most sanctions programs, but cases are limited. (See e.B. Epsilon Electronics Inc.c. U.S. Dept. of the Treasury Office of Foreign Assets Control, et. Al., In the U.S. Court of Appeals for the District of Columbia Circuit, No. 16-5118, May 26, 2017.). [30] Transactions with Russian financial institutions under OFAC`s sector sanctions for the Russian financial sector under Executive Order 13662 and related guidelines may also prohibit related financial transactions in certain cases – see OFAC Frequently Asked Questions No.

395. 1. Transactions with countries subject to country-specific sanctions programs. The first question to consider is whether you are entering into a transaction with a country subject to country sanctions programs. .