WASHINGTON—The Treasury’s Office of Foreign Assets Control (OFAC) has published “A Framework for OFAC Compliance Commitments” to provide guidance on the essential components of an effective sanctions compliance program (SCP).
CUNA noted its recent CompBlog post delves into the framework, adding that essential SCP components include:
- Management commitment
- Risk assessment
- Internal controls
- Testing and auditing
- Training
The 12-page document outlines how OFAC may incorporate these components into its evaluation of apparent violations and resolution of investigations resulting in settlements, CUNA noted.
When applying OFAC’s Economic Sanctions Enforcement Guidelines to a given factual situation, the agency will consider favorably subject persons that had effective SCPs at the time of an apparent violation, CUNA said.
“For example, ‘OFAC may consider the existence, nature, and adequacy of an SCP, and when appropriate, may mitigate a civil monetary penalty (CMP) on that basis. Subject persons that have implemented effective SCPs that are predicated on the five essential components of compliance may also benefit from further mitigation of a CMP pursuant to General Factor F (remedial response) when the SCP results in remedial steps being taken,’” CUNA explained.
The guidance also includes an appendix that offers a brief analysis of some of the root causes of apparent violations that OFAC has identified during its investigative process.
The Root Causes
Some of the root causes of violations addressed in the publication include:
- Lack of a formal OFAC SCP
- Misinterpreting or failing to understand the applicability of OFAC’s regulations
- Facilitating transactions by non-U.S. persons, especially through overseas subsidiaries or affiliates
- Processing financial transactions that involve an OFAC-sanctioned country, region, or person
- Failing to update sanctions screening software
- Decentralized compliance functions and inconsistent application of an SCP throughout branches, business units, etc.