On June 18, 2024, Baker McKenzie, in partnership with the International Compliance Professionals Association, hosted a virtual fireside chat with Lawrence Scheinert, the Associate Director for Compliance and Enforcement at the Office of Foreign Assets Control (“OFAC”) in the US Treasury Department. The webinar attracted 1640 registrations from across industry, with participants raising a wide variety of questions.
In the discussion with Baker McKenzie partners, led by Julia Webster (Toronto) with questions from Janet Kim (Washington, DC), Associate Director Scheinert discussed sanctions enforcement trends; OFAC’s compliance and outreach efforts; how the agency works with its counterparts outside the United States and its sister agencies in the United States; and what companies can generally expect in their enforcement or compliance-related dealings with OFAC. The key points are summarized below.
- Enforcement Priorities: OFAC’s enforcement priorities can be seen in its recent cases. Those show that OFAC has been focused on the virtual currency/fintech sector; non-US companies using the US financial system for transactions that violate US sanctions; a wide range of industries (i.e., not just those within the financial sector); holding individuals liable for sanctions violations; and violations of Russia- and Iran-related sanctions.
- Behind-the-Scenes Enforcement Activities: The team led by Associate Director Scheinert is busy with various enforcement activities that happen outside of public view. These include resolving most enforcement cases without a civil penalty; using tools such as blocking notices as well as cease-and-desist letters to prevent violations; coordinating with other law enforcement agencies; and using resources such as Blocked Property Reports, Suspicious Activity Reports, and whistleblower hotlines to develop leads for new enforcement cases.
- Voluntary Self-Disclosures (“VSDs”): OFAC is receiving more VSDs than in the past. Associate Director Scheinert explained that VSDs more likely to lead to successful outcomes are those that:
- Identify other parties involved in US sanctions violations (where applicable);
- Provide a company’s viewpoint on the narrative behind questionable transactions, which OFAC appreciates receiving, coupled with detailed underlying facts for OFAC also to make its own assessment;
- Analyze the “General Factors” (in Section III of OFAC’s “Economic Sanctions Enforcement Guidelines”); and
- Provide a full VSD report within a reasonable period after an initial notice is submitted to OFAC.
- Doubling of Statute of Limitations (“SOL”): As we have previously reported, the US Congress recently doubled the SOL period for US sanctions violations from five years to ten. OFAC is working through the relevant legal issues and plans to issue guidance for the compliance community about how this SOL change will be implemented.
- Increased International Cooperation: The Russia-Ukraine crisis has led to more discussions and (in at least one example) temporarily embedded personnel between OFAC and its counterpart in allied countries, including on enforcement issues. Associate Director Scheinert said that such discussions have focused on sharing best practices and relationship building.
