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Remediating OFAC Violations


May 14, 2012 One of the key general factors in the United States Department of the Treasury's Office of Foreign Assets Control's (OFAC) Enforcement Guidelines is General Factor F: Remedial Response. In order to mitigate an OFAC enforcement response concerning an apparent violation of U.S. economic sanctions, the party engaged in the apparent violation should take some type of remedial action to prevent future violations of OFAC administered sanctions. So what does OFAC look for in a remedial response? Here are a few suggestion of what actions can be taken to implement a sufficient remedial response for mitigation under General Factor F: 1. Enhance OFAC compliance policies: The first step in remediating a violation is to see what caused the violation in the first place. Was it something in the OFAC policy? Is OFAC compliance considered as part of your due diligence/KYC efforts? If so, to what extent? If upon such review it seems that your OFAC compliance measures are not up to par, strengthening such policies can be a critical step in the remedial response process. 2. Enhance OFAC compliance systems: Once the OFAC policies have been enhanced, it is important to ensure that the systems put in place to catch OFAC violations are enhanced. This can include tweaking interdiction software to broaden searches, increasing due diligence requirements, and using multiple countries' sanction lists to catch more apparent violations. 3. Enhance risk assessments: If there are any customers who are high risk for sanctions violations, their accounts may want to be reviewed to determine whether they pose too much risk. Also, your company's tolerance for risk should be reexamined to make a determination as to what level of risk is acceptable. 4. Enhance personnel: In certain cases, it may be necessary to add new experienced personnel or to train current compliance personnel to be more aware of OFAC regulations and to assist in catching apparent violations before they happen. The above are just suggestions to guide those facing the OFAC enforcement process. Other types of remedial responses are available and those facing the enforcement process should collaborate with experienced counsel to determine which remedial response would serve them best. The author of this article is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.