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OFAC Compliance Framework: A Blueprint for Businesses

The Office of Foreign Assets Control (OFAC) has issued a comprehensive framework to guide companies in developing effective sanctions compliance programs. The framework outlines five key components that provide a roadmap for businesses to ensure they are in compliance with US sanctions regulations.

Component 1: Risk Assessment and Due Diligence

Companies must conduct thorough risk assessments to identify potential sanctions risks and develop robust due diligence procedures to mitigate those risks. This includes:

  • Screening customers, suppliers, and counterparties against OFAC’s sanctions lists
  • Ensuring that all transactions are properly vetted

Component 2: Sanctions Screening and Filtering

Sanctions screening and filtering software is a critical component of any compliance program. Companies must ensure that their software is up-to-date and can accurately identify potential sanctions violations, including:

  • Using alternative name spellings to catch variations in company names or individuals with common aliases

Component 3: Internal Controls

Companies must establish written policies and procedures for sanctions compliance, which should be disseminated and enforced throughout the organization. These policies should address:

  • Reporting
  • Record-keeping
  • Escalation procedures in case of a sanctions violation

Component 4: Testing and Auditing

Regular testing and auditing are essential to ensure that a company’s sanctions compliance program is working effectively. This includes:

  • Internal audits or external reviews by third-party experts
  • Promptly addressing any weaknesses or deficiencies identified during these tests

Component 5: Training

Employees and personnel must receive regular training on sanctions compliance, including:

  • Annual training sessions
  • Refresher courses as needed
  • Ensuring that everyone in the organization understands their roles and responsibilities in maintaining a sanctions-compliant program

Key Takeaways

The OFAC framework provides a comprehensive blueprint for companies to develop effective sanctions compliance programs. By following these five components, businesses can minimize the risk of sanctions violations and ensure they are in compliance with US regulations.

Contact Us

For more information on OFAC compliance or any other legal matter, please contact our team at Clifford Chance:

  • Wendy Wysong, Foreign Legal Consultant (Hong Kong) Partner (Washington, DC)
  • David DiBari, Managing Partner (Washington, DC)
  • Michelle Williams, Partner (Washington, DC)
  • Jacqueline Landells, Counsel (Washington, DC)
  • Ali Burney, Counsel (Singapore)
  • Nicholas Turner, Registered Foreign Lawyer (Hong Kong)

This publication is intended to provide general information only and should not be relied upon as legal advice. For specific legal advice or guidance, please consult with a qualified attorney.

About Clifford Chance

Clifford Chance is an international law firm with offices in Abu Dhabi, Amsterdam, Barcelona, Beijing, Brussels, Bucharest, Casablanca, Dubai, Düsseldorf, Frankfurt, Hong Kong, Istanbul, London, Luxembourg, Madrid, Milan, Moscow, Munich, Newcastle, New York, Paris, Perth, Prague, Rome, São Paulo, Seoul, Shanghai, Singapore, Sydney, Tokyo, Warsaw, and Washington, DC.