Company executives and stakeholders in charge of making decisions to insulate their business from legal liability by the Office of Foreign Assets Control (OFAC) at the U.S. Department of Treasury have a difficult choice to make. There are numerous Office of Foreign Assets Control (OFAC) compliance and defense firms out there. How can you tell which one will be right for your company’s needs?

There is good news. The single most important factor in making this decision is the one that you know best: Your company’s particular needs and concerns.

There are Three Broad Topics in OFAC Law

For businesses, OFAC and international economic sanctions law can be split into three different issues:

1. Compliance with the trade and economic sanctions laws
2. Advancing your company’s interests under the law
3. Defending against OFAC investigations and legal liability

Each one requires the skillset of a different type of legal professional. Knowing where your company is in the stages of legal sanctions compliance and enforcement is the most fundamental part of deciding who you need to hire.

1. OFAC Compliance

If your company is not facing an OFAC investigation and you want to take the steps necessary to maximize the odds that it never faces one, you need an OFAC compliance professional. These are generally lawyers – frequently in-house counsel for large international corporations.

The goals of OFAC compliance are forward-looking, and aim to insulate the company from legal liability under international sanction law. Ideally, a successful compliance mechanism would ensure that your company is never even suspected of evasion or OFAC violations.

This is not easy to do. There are several important federal laws that authorize or create economic sanctions on foreign powers, such as the:

• Trading with the Enemy Act of 1917
• International Emergency Economic Powers Act of 1977
• Foreign Narcotics Kingpin Designation Act
• Iran Threat Reduction and Syria Human Rights Act of 2012
• Countering America’s Adversaries Through Sanctions Act of 2017

Additionally, some of these laws give the President of the United States the power to impose American economic sanctions by issuing an executive order.

Creating compliance systems that ensure that none of these laws are violated is tricky. Each company has unique business practices and so will also have unique exposures to legal liability under OFAC’s jurisdiction.

Furthermore, compliance professionals and OFAC compliance lawyers will have to create systems for the company that do not unduly hamper its finances or its corporate efficiency. The compliance mechanisms have to prioritize warding off legal threats, but the expense at which they do this is not a non-factor and needs to be kept as low as possible. Of course, the cost is well worth it as the penalties for violating these laws is far more expensive. For instance, violating the International Emergency Economic Powers Act carries a fine of about $308,000 per violation.

2. Advancing Your Interests Under OFAC

Other companies need guidance so they can advance their financial interests in spite of OFAC regulations blocking their path. While this involves complying with the sanctions laws that OFAC enforces, it also involves interacting with the agency. This is not a purely internal affair, and generally includes an amount of lobbying for your company’s interests with the agency.

Two common situations where this arises are when:

1. Your company has been the target of OFAC sanctions, or
2. Your company wants to get a license that exempts it from OFAC enforcement and lets your company deal with a sanctioned party.

It is not uncommon for OFAC to sanction parties erroneously or without adequate justification in the name of national security. In many cases, the breadth of economic sanctions is far wider than it reasonably should be. Sometimes this is the result of political interests that want to seem like they are strongly against a course of conduct. For example, after the Russian invasion of Ukraine, American political forces made a point of issuing extremely broad economic sanctions against Russian people and businesses. Many of the targets of those sanctions, however, had little to do with the Russian government or its military operations. These sanctions did little more than inflict needless pain. Challenging the designation as a sanctioned individual or party is possible and can be essential for a company’s continued survival.

If your company is not designated for sanction but wants to deal with one that is, it is possible to open a dialogue with OFAC and request OFAC licensing to interact with them. If successful, your company would be exempted from the sanctions and could transact business as it normally would, though under OFAC’s watchful eye. Obtaining this license, however, is notoriously tricky, as it involves convincing OFAC that its decision to sanction the designated party should stand, but not in relation to your business.

3. OFAC Investigations and Defense

Finally, if you have been served an OFAC administrative subpoena, or have learned that OFAC is investigating your company for potential violations of economic sanctions, you need an OFAC defense lawyer to protect your rights and interests during the investigation. If your legal counsel is not able to forestall the investigation or if OFAC investigators uncover enough evidence to justify further legal action, your OFAC lawyer will defend the allegations in court. The worst of these violations can be prosecuted as criminal offenses that have criminal penalties that carry up to 20 years in prison, so having an experienced and effective OFAC defense attorney is critical.

The good news is that there are several OFAC defense strategies that can be used to fight the charges or at least mitigate the damages of a costly criminal conviction. In many cases, recent updates to the list of Specially Designated Nationals and Blocked Persons (SDN) can lead to allegations of a violation of sanctions before a business can bring itself into compliance or even becomes aware of their business partner’s recent addition to the list. By stressing how recent the changes were, it can drastically reduce the severity of the OFAC enforcement action. So too can highlighting the company’s extensive compliance protocols, which can be used to show the business’ commitment to following the rules.

Conclusion

According to Dr. Nick Oberheiden, founding partner of the national law firm Oberheiden P.C. and a leading OFAC compliance and defense lawyer at the firm, “Once you understand your needs, finding the right lawyer is a matter of researching the available options for the one that fits the best. That best fit is generally the attorney or firm that has the most experience handling similar cases to your own for companies that operate in the same business or sector and in the same part of the world that is connected to the legal threat facing your organization.”