OFAC Sanctions Guidance Part of Broader Compliance Push, May Help With Prosecution, Lawyers Say

The Treasury's Office of Foreign Assets Control’s recent publication of a sanctions compliance guide is the latest example of OFAC’s long-term effort to show companies what makes an effective compliance program, trade lawyers said. But the effort may also ultimately benefit the Treasury, according to one lawyer, by making it easier for the department to successfully prosecute compliance cases.

Joseph Gustavus, a corporate trade lawyer, said that as OFAC continues to publish details about effective compliance programs, the agency may use those details to support their prosecution cases. “A case could be made that with all this guidance out there, a U.S. person or business could have knowingly committed a sanction violation,” Gustavus said. “It helps with prosecution.”

The 12-page guide, which OFAC published May 2, details sanctions compliance for U.S. and foreign businesses while outlining several “root causes” of violations (see 1905020036). Besides helping with prosecution, the guidance may also help OFAC justify “mitigating factors” for more lenient penalties. “Should you develop a compliance program that is in accordance with this guideline,” Gustavus said, “the penalties may not be so punitive.”

The guide was the most recent effort by OFAC to disseminate compliance guidance to the international trading community, usually doing so in settlement agreements with companies that commit violations. But the guide was “the first time that OFAC has pulled it all together and been specific about it,” said Brian Frey, a sanctions lawyer. “Anyone who has any potential risk to sanctions is expected to have these procedures in place.”

Gustavus said some of the most noteworthy compliance principles in the guide surround assessing the risk of “indirect shipments” to potentially prohibited countries or entities and the “use of your foreign affiliates.” Frey said OFAC is showing that “every business needs to have a meaningful understanding of their risk of exposure to” sanctions. “If you're a company sitting out there and you don't have a program in place and you see this guidance, look at your business, look at your weak points, look at what product lines you are in that may expose you to risks,” he said.