Meshkat Law advises clients on OFAC sanctions compliance across a wide range of business activities, transactions, and internal control issues. The firm provides practical, risk-based guidance to help clients identify, assess, and manage sanctions risk in day-to-day operations, more sensitive cross-border matters, and mergers and acquisitions (M&A) and investment due diligence.
OFAC administers and enforces U.S. economic sanctions programs that can outright prohibit or substantially restrict dealings with sanctioned countries, regions, governments, entities, and individuals. For businesses and organizations operating across borders, sanctions compliance often requires more than basic list screening and may involve difficult questions about ownership and control, facilitation, blocked or rejected transactions, geographic risk, and the application of OFAC administered laws and regulations to commercial transactions and relationships.
We advise clients on OFAC sanctions compliance at both the transactional and programmatic level. Our work includes day-to-day legal guidance, legal advisory opinions, compliance program design and enhancement, screening support, training, audits, and investigations relating to potential sanctions exposure. We also regularly advise on matters where OFAC sanctions issues intersect with BIS export controls and understand the nuances that arise when both regimes are in play, including for transactional advice and in the design and implementation of compliance programs.
We provide routine transactional advice on issues arising under OFAC-administered sanctions programs, including questions involving counterparties, payment flows, contractual performance, blocked or rejected transactions, and sanctions-related risk allocation. This also includes preparing legal advisory opinions to help clients assess whether and to what extent contemplated conduct raises OFAC concerns and how those concerns should be addressed from a compliance perspective.
We assist organizations in designing, implementing, and refining OFAC sanctions compliance programs tailored to their operations and risk profile. This includes helping clients develop policies and procedures, escalation frameworks, governance controls, and documentation practices consistent with risk-based compliance expectations. A well-designed and effectively implemented sanctions compliance program can serve as a mitigating factor in the event of any enforcement action by OFAC.
We help clients evaluate their OFAC sanctions exposure through targeted risk assessments and audit support. Risk assessments help design and maintain a tailored sanctions compliance program, by mapping sanctions risk across key business lines and highlighting where existing controls may not match the underlying risk profile, and informing concrete recommendations to implement or update policies, procedures, and controls. Audits focus on testing existing controls, identifying gaps or issues, and recommending practical enhancements to strengthen compliance.
We also support OFAC-focused risk assessments in the context of mergers and acquisitions and other investments, evaluating target businesses and historic activity for sanctions exposure and advising on post-closing integration and remediation where issues are identified.
Under OFAC’s Framework for Compliance Commitments, training is one of the essential elements of an effective sanctions compliance program. We provide OFAC training tailored to the organization’s risk profile, business model, and staff responsibilities. This can include targeted sessions for the board and senior management as well as training for compliance, finance, operations, and commercial teams to help ensure that personnel understand applicable sanctions requirements and internal escalation procedures.
We advise on sanctions screening, escalation, and internal investigations relating to potential OFAC issues. This includes helping clients distinguish whether particular transactions should be treated as blocked or rejected under OFAC regulations, assess potential violations, and determine appropriate next steps in light of their regulatory obligations and risk profile.
The following matters are representative of OFAC compliance engagements handled by our attorney.
Prior results do not guarantee a similar outcome.
No, an entity that is controlled but not owned 50 percent or more by one or more blocked persons, including persons identified on the SDN List, is not considered automatically blocked under OFAC’s 50 Percent Rule. However, caution should be exercised in dealing with such an entity to avoid dealings with the blocked person.
In addition, certain OFAC sanctions programs impose full blocking sanctions on persons without an OFAC designation or under the 50 Percent Rule, including entities that meet the definition of a government that is blocked pursuant to applicable sanctions authorities (e.g., the governments of Cuba, Iran, North Korea, Venezuela, and the sanctioned regions of Ukraine).
U.S. law does not mandate organizations to have their own sanctions or export controls-related compliance program. However, businesses subject to U.S. jurisdiction under relevant OFAC administered sanctions laws and regulations, wherever located, must comply. In addition, businesses dealing in items (i.e., commodities, software, and technology) subject to BIS’s Export Administration Regulations (EAR) and/or DDTC’s International Traffic in Arms Regulations (ITAR) must comply with the respective regulations, wherever located. Therefore, businesses should take a risk-based approach to compliance based on a variety of factors, including their respective size, sophistication, products and services, customers and counter-parties, geographic locations, and other operational idiosyncrasies.
An organization’s sanctions and/or export compliance program, including applicable procedures and controls, will be designed and updated based on its respective risk profile. The existence and adequacy (or lack thereof) of such compliance programs can act as a mitigating or aggravating factor in the event of an enforcement response for any potential violations of relevant laws and regulations.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers and enforces the nation’s economic sanctions programs, based on various statutes and executive orders, including against entire countries, their governments, geographic regions, and groups of individuals or entities. The sanctions can include the full blocking of the sanctioned target’s assets and/or various trade restrictions.
U.S. export controls are primarily administered and enforced by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC).
BIS administers the Export Administration Regulations (EAR), which regulate the export, reexport, and transfer (in-country) of most commercial items of U.S.-origin (“dual-use” items), wherever located, and imposes licensing requirements depending on their intended end-user, end-use, and/or destination. The EAR’s jurisdiction and licensing requirements can also extend to foreign-made items depending on the involvement or incorporation of U.S.-origin goods, technology, and software, as well as their intended end-user, end-use, and/or destination.
DDTC administers the International Traffic in Arms Regulations (ITAR), which regulates the export, reexport, and transfer of primarily defense articles and defense services.
OFAC does not maintain an official or otherwise specific list of countries that persons subject to U.S. jurisdiction are prohibited from doing business with. OFAC’s various sanctions programs, and the laws and regulations that comprise them, vary in scope. While some countries or geographic regions are indeed subject to a comprehensive embargo (e.g., Iran, Cuba, North Korea, and certain occupied regions of Ukraine), a majority of OFAC’s sanctions programs target specific individuals and entities—who can be located anywhere in the world—with sanctions.
Sanctioned individuals and entities may be identified on various OFAC administered sanctions lists. However, entities that they own directly or indirectly, 50 percent or more, whether individually or in the aggregate with other sanctioned persons, can also be subject to applicable sanctions authorities under OFAC’s 50 Percent Rule.
There are also several OFAC sanctions programs targeting specific countries that are unique in nature, including Russia and Venezuela for example. Although they do not amount to a comprehensive embargo, these sanctions programs do greatly restrict persons subject to U.S. jurisdiction from engaging in various specified transactions involving their economies and/or governments, as well as numerous individuals and entities identified on OFAC’s sanctions lists.
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Transactional Advice and Counseling