What Does the Office of Foreign Assets Control (OFAC) Do? (2024)

The Office of Foreign Assets Control (OFAC) is the regulatory authority responsible for economic and trade sanctions designated by the United States.

The successor to the Office of Foreign Funds Control (FFC), OFAC administers and enforces sanctions based on U.S. foreign policy and national security goals by targeting certain foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction and other threats to national security, foreign policy or the economy by imposing controls on transactions and freezing assets under U.S. jurisdiction.

How do OFAC sanctions work?

OFAC sanctions targeted countries as well as individuals and companies owned, controlled or acting on behalf of certain countries but can also target individuals, groups, and entities, such as terrorists and narcotics traffickers, that are not specific to a country. OFAC notifies the public of these decisions by publishing lists, such as the Specially Designated Nationals (SDNs) List or the Consolidated Sanctions List. Further groups and individuals that are not explicitly named in these lists can still fall under the scope of OFAC’s discipline through the use of secondary sanctions.

In May 2019, OFAC released extensive new guidance on what constitutes an effective sanctions compliance program. Coming amidst a complex sanctions environment and an increasingly aggressive approach to enforcement, the guidance provides insight into OFAC’s views on the best practices that companies should follow to ensure compliance with U.S. sanctions laws and regulations. It also serves as a roadmap for how to prevent sanctions violations from occurring, as well as how OFAC will assess the adequacy of a company’s compliance program in the event of a violation.

The core elements of OFAC’s sanctions components program map very closely to the traditional pillars of an AML program:

• Management commitment: Everything in a company starts with management commitment; this means not only focusing on upper management but also establishing a governance structure that makes sense for the organization to evaluate financial crime risk.
• Risk assessment: Some of the most difficult issues in the compliance field deal with assessing what consequences fall in a particular zone of risks and what one can do to mitigate those risks.
• Internal controls: The development of internal policy procedures is essential. Effective risk assessment is critical to help organizations understand the types of financial crimes risk that they’re likely to encounter.
• Training: Every person in an organization should understand the role they have to play in fighting financial crime.