OFAC Compliance

Despite the Coronavirus pandemic, OFAC hasn’t eased sanctions

In fact, for some countries already facing sanctions and embargoes—for a variety of reasons that include propping up corrupt regimes, or engaged in state-sponsored terrorism—organizations and individuals continue to be added to Office of Foreign Assets Control (OFAC) watch lists on a regular basis. Here are but two recent examples.

Vast criminal networks continue to grow despite global pandemic

One recent case in point is the designation of “20 Iran- and Iraq-based front companies, senior officials, and business associates that provide support, to or act for or on behalf of, the Islamic Revolutionary Guards Corps-Qods Force (IRGC-QF).” Among some of the activities these organizations and individuals engaged in were money laundering, funding militias, arms smuggling, and embezzlement, to name just a few.

This despite Iran being one of the hardest hit Middle Eastern countries by the COVID-19 pandemic, with “multiple Iranian government ministers and senior officials and roughly 8% of members of the Iranian Parliament” infected with the virus.

The key takeaway is that, for better or worse, and despite organizations being called upon to be show more compassion than ever before, sanctions and embargoes, not to mention denied and restricted watch lists, still exist, continue to be updated, and OFAC compliance is still required.

Sanctioned parties can be located virtually anywhere
Organizations already screening likely know a red flag when they see one, especially as it applies to countries—and companies located within—generally known to be facing OFAC sanctions. Russia, Venezuela, Iran, and Iraq are just a few that come to mind.

However, organizations should always practice compliance and screening due diligence, even when doing business with companies located in countries typically considered “safe.” Take Switzerland, for example. Recently, OFAC announced sanctions against Swiss-incorporated TNK Trading International S.A. (TTI) for violating sanctions related to the Venezuelan oil sector. Despite its “benign” location, TTI is a subsidiary of Russian state controlled Rosneft Oil Company, itself under OFAC sanctions.

Punitive measures taken against the company include the forfeiture of assets in the United States in “possession or control of U.S. persons, and of any entities that are owned, directly or indirectly, 50 percent or more, by the designated individuals and entity.” The latter item—the 50% rule—is a separate topic in and of itself.

Global pandemics do not ease global embargoes and sanctions
The U.S. Department of the Treasury’s website is replete with new sanctions against countries, companies and individuals, and they are frequently being updated. Global pandemic aside, it does not negate responsibilities as they relate to export, trade and OFAC compliance.