As part of the U.S. government measure to enforce anti-money laundering/counter terrorism financing (AML/CTF) regulations, the U.S. Treasury has a dedicated department, the OFAC (Office of Foreign Asset Control) to oversee economic and trade sanctions. These sanctions are against countries, individuals or outfits engaged in disreputable activities like terrorism and narcotics. Sanctions Lists are based on US foreign policy, national security goals and ongoing United Nations directives. The OFAC regulations are in place to ensure that companies in the U.S. or working out of U.S., do not unwittingly do business with terrorist organisations or other unsanctioned entities.
The role of the OFAC
The mission of the OFAC is to administer and enforce economic and trade sanctions based against targeted foreign countries and regimes, terrorists, international narcotics traffickers, or those engaged in illicit activities. Such unlawful activities include the build-up of weapons of mass destruction, pursuits that pose a threat to the national security, foreign policy or the economy of the United States.
The primary role of the OFAC is to safeguard the country from being impacted by massive transactions by drug cartels and terrorist organisations. By implementing ongoing diligence against sanction lists of individuals or countries, the OFAC ensures that the U.S. financial system is less vulnerable to use for unlawful activities. On the other hand, sanctions against terror outfits and terrorists, is a key way to control terrorism by cutting off the financing channels.
The OFAC sanctions based on U.N. mandates are a way of making the lives of such countries or groups of individuals difficult by bearing pressure upon them to comply with regulations or discontinue such illicit activity.
The OFAC is empowered to impose controls on transactions of those on the sanction lists and freeze their assets under U.S. jurisdiction.
As many of the sanctions are supported by the United Nations and other international directives, the OFAC is required to cooperate closely with allied governments.
OFAC sanctions screening
This Sanctions List screening makes it compulsory to check against the Specially Designated Nationals And Blocked Persons List(SDN) and all other sanctions lists put out by OFAC, including the Foreign Sanctions Evaders List, the List of Persons Identified as Blocked, the Non-SDN Iran Sanctions Act List, the Sectoral Sanctions Identifications List and the Non-SDN Palestinian Legislative Council List.
What countries are OFAC sanctioned?
Lists of sanctioned countries are continuously updated and available here. Currently, the sanctioned countries include the Balkans, Belarus, Burma, Cote D’Ivoire (Ivory Coast), Cuba, Democratic Republic of Congo, Iran, Iraq, Liberia, North Korea, Sudan, Syria, and Zimbabwe.
What are “Specially Designated Nationals and Blocked Persons” (SDN) Lists?
These are lists of individuals and companies owned, controlled or acting on behalf of, targeted countries. The list also contains individuals, groups, and entities, such as terrorists and narcotics traffickers specified under other programs that are not country-specific, but pose a global threat. Their assets are blocked and U.S. persons are generally prohibited from dealing with them.
Who must comply with the OFAC?
All citizens, permanent residents, U.S. incorporated entities and their foreign branches; must comply with the OFAC regulations. Certain programs, such as those regarding Cuba and North Korea, where foreign subsidiaries are owned or controlled by U.S. companies; must also comply.