What is the US OFAC?
The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. Treasury Department responsible for the planning and execution of economic and trade sanctions in support of U.S. national security and foreign policy objectives, such as national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.
The agency plays a significant role in imposing significant penalties against entities that defy its regulations, including imposing huge fines, freezing of assets, and barring other parties from operating with the US. More notably, OFAC administers and enforces economic sanctions against hostile targets in furtherance of U.S. foreign policy and national security objectives, primarily against countries and groups of individuals, such as terrorists and narcotics traffickers.
OFAC publishes a Sanction list, that features individuals, parties, or countries that U.S. businesses should not legally engage in business with. This applies to all U.S. citizens and permanent residents regardless of their locations, as well as all individuals and entities located in the United States, who must comply and abide with OFAC regulations. OFAC also has jurisdiction over corporations organized under U.S. law, including foreign branches and representative offices abroad. This means that if foreign entities want to do business in the U.S., they need to abide by the regulations set by OFAC and comply with U.S. sanctions. OFAC administers a number of different sanctions programs and these sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals.
Penalties for violating OFAC regulations are serious, and they include criminal fines and civil penalties that can be as high as $1 million or twice the gain from the violation – whichever is greater. Individuals who violate these regulations may be subject to prison sentences as long as 20 years.