Knowledgebase

OFAC

A guide to OFAC sanctions

The Office of Foreign Assets Control (OFAC) creates and enforces the economic sanctions imposed by the United States. The office is a branch of the US Department of Treasury and was founded in 1950, under President Truman, to prevent China from getting involved in the Korean War. OFAC creates economic sanctions based on concerns regarding America’s foreign relations, acts of terrorism against the US, and other threats to national security.

OFAC imposes two main types of sanction against countries: comprehensive and non-comprehensive sanctions. (Non-comprehensive sanctions are sometimes referred to as “selective” or “targeted” sanctions.)

A comprehensive sanction prohibits all transactions between the sanctioned country and the US, except in special circumstances where a license is granted by OFAC. This means that there can be no imports, exports, financing of goods, distribution of technology and services, or trade brokering between American citizens and the sanctioned country. As of 2016, OFAC has comprehensive sanctions against several countries, including Crimea, North Korea, Sudan, and Syria.

Non-comprehensive sanctions limit the activity of a specific company, industry, or practice. For example, a non-comprehensive sanction might ban diamond trading between the US and another country. Non-comprehensive sanctions can also ban transactions between the US and specific individuals. If America does not support a country’s current government, OFAC can impose sanctions against those who support the regime. For instance, the US currently sanctions any individual who threatens the “sovereignty” or “democratic processes” of Lebanon. OFAC currently imposes non-comprehensive sanctions upon many other countries as well, including Belarus, the Democratic Republic of the Congo, Iraq, Liberia, Somalia, and Zimbabwe.

In addition to creating these sanctions, OFAC is responsible for enforcing them and granting exceptions to certain institutions. If any company or individual over which the US holds jurisdiction breaches the terms of an active sanction without first being granted an official exemption, OFAC can impose severe penalties including fines and imprisonment.

To obtain exemption from a sanction, a special license must be granted by OFAC. OFAC must determine that there is a substantial and persuasive reason for a license to be granted. Very strict rules and regulations must be followed in order to keep this license once it is granted, and if they are not, the license holder can face prosecution. In certain scenarios, however, OFAC is not legally able to grant exemptions from sanctions. And, of course, not every request for exemption will be granted by OFAC.

Our solutions can help you search, screen and monitor individuals on global sanctions lists, including OFAC, UN, HMT, EU, and DFAT.