By Steven D. Mercatante Esq.
 
The United States Treasury Department’s Office of Foreign Assets and Control (OFAC) is used to oversee transactions between U.S. entities and foreign persons or entities, administer embargoes, and promulgate regulations and restrictions applicable to many different payees. The Treasury Department uses OFAC to inform you as to whom you can and cannot do business with and whom to avoid making payments. Accordingly, you need to research the OFAC list – if for no other reason than avoiding the negative consequences that can follow from a failure to know the law.
 
OFAC penalties are among the most severe an organization can incur; violators of the OFAC rules are exposed to both criminal and civil penalties. Regardless, many payers do not even know what OFAC is no less how to comply with the OFAC rules. Thus, it is not only necessary for information reporting payers to educate themselves but also establish whom to avoid in terms of doing business. Only then can you ready yourself to act appropriately if you find out the payee is on the OFAC list.
 
This article series will provide some common sense guidance to help you avoid running afoul of the OFAC rules. In our first article, we will describe exactly what OFAC is and what it is seeking to accomplish. In the second part of our series on OFAC, we will walk you through some recommended steps you will need to follow in order to avoid sanctions under the OFAC rules. In our third and final article in this series, we will provide some guidance in case you discover you may have been inadvertently working with a prohibited entity or individual.