The Office of Foreign Assets Control (OFAC) is responsible for creating, implementing and enforcing the United States’ sanctions. All parties under US jurisdiction must abide by OFAC sanctions and associated regulations. Exemptions to sanction orders can be granted by OFAC, but only under certain circumstances. If you or your company wishes to obtain an exemption license, you must contact the Treasury Department. For certain exemption licenses, you can also apply online.
OFAC considers non-compliance with sanctions to be a serious threat to national security and foreign relations. Consequently, those who breach OFAC sanctions without obtaining the proper license can face severe legal repercussions. Fines range up to $20 million, depending the offence, and prison sentences can be as long as 30 years.
If, in violating a sanction, a party also violates the Trading with the Enemy Act, it may be penalised with $65,000 fine per violation. For violations of the International Emergency Economic Powers Act, the fine increases to $250,000 per violation. Similarly, breaking provisions of the Foreign Narcotics Kingpin Designation Act can result in fines of up to $1,075,000 per violation.
Naturally, these numbers vary considerably depending on the specific crime committed and the number of times it occurred. The specifics of these sanctions also change very frequently, so it is crucial to stay up to date; this will allow you to ensure both that you are compliant and that you don’t unnecessarily limit your business activity by adhering to sanctions that have been revoked.
Given the steep penalties in place, it is understandable that many companies and individuals concerned about violating a sanction policy inadvertently. Although there is no official amnesty program in place within OFAC, institutions are nevertheless strongly encouraged by the Treasury Department to report any previous unlawful transactions. OFAC also encourage companies to contact them if there is any doubt as to whether or not a policy violates OFAC’s current regulations. Reports of past violations should take the form of a transparent and detailed letter and include copies of all relevant paperwork. Of course, because there is no official amnesty program, passing on notice of violations to OFAC does not guarantee any kind of leniency, but it can lessen the chance of prosecution or reduce the severity of legal and financial penalties. Honest mistakes happen, and OFAC does recognize this when investigating cases.