OFAC Compliance and Why It’s Important
Who is OFAC?
The Office of Foreign Assets Control (OFAC) is a division of the U.S Department of the Treasury that supports U.S foreign policy by enforcing sanctions against countries and groups. Entities under U.S sanctions include foreign governments, narcotics traffickers, money laundering culprits and organizations involved in terrorism or the proliferation of weapons of mass destruction.
Importance of OFAC Compliance
Many companies underestimate how serious the consequences of having an OFAC violation can be. Organizations not complying with OFAC-administered sanctions are liable for significant penalties, even if their action was unintentional or uninformed. The importance of reducing the likelihood of payments being sent to individuals or organizations determined to be threats to US national interests is paramount.
Penalties can include:
- Civil penalties: $250,000 or twice the amount of each underlying transaction up to $1,075,000 per violation.
- Criminal penalties: $50,000 or $10,000,000 fine; 10-30 years in prison
- Publication of penalty: OFAC publishes the names of companies that have been penalized
See below for drastic increase in entities on the OFAC list since 1994.
How to Mitigate Risk of OFAC Violations
Screening customers, clients, and vendors should be a key element of any compliance program. Using an ePayments or Finance Automation company for Accounts Payable payments is the best way to effectively protect your company against doing business with vendors on the government’s Do Not Pay list and avoid the penalties.
Our solutions at Paymerang have built in compliance enhancing functions, such as centralized record-keeping for audit purposes, that are critical to being able to demonstrate OFAC compliance. A common short falling of many organizations is not updating the Do Not Pay list, which you can see below is growing exponentially.
Is Your Business OFAC Compliant?
Take some time to assess your compliance program. Does it include OFAC? Are you screening adequately? Does your training include sanctions programs and compliance?
Paymerang is well-equipped to assist your company in establishing a comprehensive compliance program or improving an existing one. We can also assist with training and auditing. Contact us for a free demo.