International Regulatory Enforcement (PHIRE)
Something Familiar, Something New: OFAC’s Compliance Program Framework
By Scott M. Flicker, Kwame J. Manley Tom Best & Talya R. Hutchison
The U.S. Department of the Treasury’s Office of Foreign Asset Controls (“OFAC”), the U.S. agency responsible for administering and enforcing economic and trade sanctions has released “A Framework for OFAC Compliance Commitments” (the “Framework”). The Framework outlines what OFAC views to be the five essential components of a Sanctions Compliance Program: (i) management commitment; (ii) risk assessment; (iii) internal controls; (iv) testing and auditing; and (v) training. Companies engaging in cross-border transactions would be well-advised to review and update their compliance programs to ensure that they incorporate these essential sanctions compliance benchmarks.
What This Could Mean for You
This is the first time OFAC has provided explicit guidance on the elements of an effective sanctions compliance program.
Accordingly, companies who come under OFAC enforcement scrutiny will be hard-pressed to plead ignorance as to what a sufficient program should cover.
The existence of an effective compliance program—or lack thereof—will now be expressly considered in assessing monetary penalties for violations.
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