15 Aug 2019
In guidance published earlier this year (“Framework document”), the US Treasury Department’s Office of Foreign Assets Control (OFAC) lists 10 “root causes” of inadequate sanctions compliance programs (SCPs) derived from historical enforcement actions it has taken:
- Lack of a formal OFAC SCP
- Misinterpreting, or failing to understand the applicability of, OFAC’s regulations
- Facilitating transactions by non-U.S. persons, including through or by overseas subsidiaries or affiliates
- Exporting or re-exporting U.S.-origin goods, technology or services to OFAC-sanctioned persons or countries
- Utilizing the U.S. financial system, or processing payments to or through U.S. financial institutions, for commercial transactions involving OFAC-sanctioned persons or countries
- Sanctions screening software or filter faults
- Improper due diligence on customers/clients (e.g., ownership, business dealings, etc.)
- Decentralized compliance functions and inconsistent application of an SCP
- Utilizing non-standard payment or commercial practices
- Individual liability
Let’s look back at 2019’s OFAC enforcement actions so far, and see how they correspond to each of these program faults, based on the behaviors related to the penalty, and OFAC’s assessment of the behaviors. That will give us some sense of how frequently each of these occurs. With regard to the individual liability factor, it will only be listed when individuals are acting with the intent to circumvent sanctions regulations, as opposed to less willful conduct.
Also note that the August 8th, 2019 Finding of Violation against Southern Cross Aviation LLC is not listed below, as there were no documented violations of any sanctions regulations other than that of the Reporting, Procedures and Penalties Regulations, or RPPR.
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