OFAC Director Announces New Policy for Multi-Agency Penalty Payments

The Treasury’s Office of Foreign Assets Control will end its practice of allowing sanctions violators to satisfy OFAC penalties through payments to other agencies, changing how it calculates penalties in investigations that involve more than one enforcement agency, OFAC Director Andrea Gacki said.

Gacki, speaking at a June 13 American Bar Association event, said that instead of crediting payments for penalties to other agencies, OFAC will now force certain violators to make separate payments to OFAC for the violations. OFAC will now only credit payments made to other agencies if the violations “relate to the same pattern of conduct for the same period of time as gave rise to the OFAC penalties,” Gacki said, according to a copy of her prepared remarks provided by the Department of the Treasury.

Gacki said this change came into play in two recent OFAC enforcement cases against Standard Chartered Bank and Unicredit Group in April. “We deemed satisfied the OFAC settlement amounts for payments the banks made to other federal agencies for penalties that arose out of the same patterns of conduct and for the same periods of time,” Gacki said. Gacki said the move will “balance OFAC’s desire to avoid unnecessary piling-on with a strategic use of its enforcement authorities.”

Gacki also addressed what she said is a “narrative among practitioners and followers of sanctions issues that last year OFAC wasn’t putting much attention, or effort, towards enforcement of its sanctions.” Gacki said there was a “lull” in 2018 wherein “we didn’t issue as many public settlements or penalties as we had traditionally” in past years. OFAC issued seven enforcement penalties in 2018, the lowest amount in more than a decade.

“While I can understand how some could view this as indicia of shifting priorities or resource constraints,” she said, “that couldn’t be further from the truth.” Gacki said some cases “may not advance as quickly as we would like” but said the agency tries not to “rush” enforcement actions, adding that OFAC tries to “dedicate the time and attention that they deserve.”