Treasury Department official Andrea Gacki discussed the details of a new framework that outlines how U.S. and non-U.S. companies should ensure compliance with economic and trade sanctions at a June 13 breakfast meeting of the ABA Standing Committee on Law and National Security.
The document, “A Framework for OFAC Compliance Commitments,” encourages companies that conduct business in or with the United States to develop and routinely update a program to comply with U.S. economic and trade sanctions.
“A well-thought out sanctions compliance program can save a company millions in fines and fees,” said Gacki, director of the Treasury Department’s Office of Foreign Assets Control (OFAC). “Our compliance framework shows the types of objectives we’re looking for.”
The guidelines are part of Treasury Department efforts to more clearly outline its compliance expectations “across the board,” Gacki said, adding that a strong compliance program will go a long way in the event of an OFAC enforcement action.
Most U.S. and non-U.S. companies that engage in international trade have practices that fall short of the elements described in the framework. Gacki suggested these companies should study the framework to determine whether to update or enhance their programs.
OFAC has settled several actions recently that underscore its focus on compliance programs that follow the new framework, issuing 12 enforcement actions and settlement agreements totaling over $10 million in penalties against entities including engineering, manufacturing, shipping and software industries. OFAC has traditionally focused its enforcement efforts on financial institutions. OFAC’s focus beyond financial institutions makes it apparent that sanctions enforcement now extends to all players in the global economy.
Gacki pointed out OFAC’s March 2019 settlement with the Stanley Black & Decker company, noting that even though the company conducted pre-acquisition due diligence and training upon closing, OFAC still criticized the company for failing “to take appropriate steps to audit, monitor, and verify newly acquired subsidiaries and affiliates for OFAC compliance.”
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