The Office of Foreign Assets Control (OFAC) is a U.S. government agency responsible for enforcing economic and trade sanctions against foreign countries, organizations, and individuals deemed a threat to national security, foreign policy, or the economy.
OFAC’s history dates back to the 1940s during World War II when the U.S. government first imposed trade restrictions on enemy countries and their citizens. Over the years, the agency has expanded its reach to enforce sanctions against countries such as Iran, North Korea, and Syria, as well as against individuals and organizations involved in activities such as money laundering, terrorism, and human rights violations.
OFAC does not issue a certification or require a test for compliance. Companies and financial institutions operating within the U.S. or with U.S. connections must comply with OFAC sanctions regulations by performing “OFAC checks” on their customers, transactions, and other relevant information to ensure they are not engaging with individuals or entities on the OFAC’s Specially Designated Nationals (SDN) list.
OFAC sanctions apply to U.S. citizens, U.S. companies, and individuals or organizations operating within the U.S., as well as to foreign companies and financial institutions that are involved in transactions with the U.S. or have U.S. connections. This means that non-American companies and financial institutions may also be required to comply with OFAC sanctions regulations.
The penalties for not conducting an OFAC check or for violating OFAC sanctions can be severe, including civil fines, criminal penalties, and even imprisonment. Companies and financial institutions may also face reputational damage, loss of business opportunities, and other consequences if they are found to be in violation of OFAC regulations.
In conclusion, OFAC is a government agency responsible for enforcing economic and trade sanctions against foreign countries, organizations, and individuals deemed a threat to the U.S. Companies and financial institutions must comply with OFAC regulations to avoid severe penalties and other consequences.
This page was last updated on January 29, 2023.