The Office of Foreign Assets Control has issued a document reaffirming the need for exporters to maintain a robust, meaningful sanctions compliance program based on their risk profile that addresses key elements such as regular audits and training. The existence, nature, and adequacy of SCPs can help mitigate civil monetary penalties for sanctions violations, and this document provides a framework for how OFAC will evaluate such programs. It also outlines several of the root causes that have led to sanctions violations.
OFAC strongly encourages organizations subject to U.S. jurisdiction, as well as foreign entities that conduct business in or with the U.S. or U.S. persons, or using U.S.-origin goods or services, to develop, implement, and routinely update an SCP. While each program will vary depending on factors such as the company’s size and sophistication, products and services, customers and counterparties, and geographic locations, each should be predicated on and incorporate at least the following five components.
Senior management commitment – management reviews and approves the SCP; provides adequate authority, autonomy, and resources for compliance unit; promotes a culture of compliance; and takes compliance problems seriously
Risk assessment – conduct routine and ongoing risk assessments of clients, products, services, and geographic locations to identify potential risks of violating OFAC sanctions; use assessment results to inform due diligence efforts
Internal controls – implement and enforce policies and procedures to identify, interdict, escalate, report, and keep records pertaining to activity that may be prohibited by OFAC laws and regulations; conduct internal and/or external audits and assessments on a periodic basis; remediate any weaknesses identified immediately and effectively
Testing and auditing – maintain a comprehensive, independent, and objective audit or testing function to assess the effectiveness of current processes and check for inconsistencies with day-to-day operations; update this function as necessary to account for changing risk assessments or sanctions environments
Training – provide job-specific knowledge based on need, communicate sanctions compliance responsibilities for each employee, and hold employees accountable through assessments
Sandler, Travis & Rosenberg’s export controls and economic sanctions professionals can help exporters develop and implement effective SCPs. For more information, please contact export compliance attorney Kristine Pirnia at (202) 730-4964.