The Office of Foreign Assets Control administers and enforces economic sanction programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. These sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. The U.S. government has become increasingly proactive in the last couple years identifying and penalizing U.S. companies that are engaging in commerce (willingly or otherwise) with any blocked companies, groups or entities. The fines for violations can be substantial; criminal penalties for violations can include fines ranging up to $20 million and imprisonment of up to 30 years.
Who is at risk?
The very simple truth is that every corporation is at risk of working with service providers that have been sanctioned by OFAC. In the last two years alone, over 50 U.S. companies have been found in violation of OFAC regulations and have, as a result, been penalized and fined severely. In total, over $2.5bn in fines has been collected from the transgressing U.S. companies. Although the incidences of cases tilts towards the banking sector, these violations cross all industry segments and have affected companies in many verticals, including manufacturing, technology, transportation, energy, and many others. The incidence of cases is not a “once per year” effort either, but rather, case activity is significant throughout the entire year. In 2014, the average fine per company (with outliers removed) was $11 million.
Is your company at risk? As a matter of doing business, your corporation must buy goods and services from third party sources; the process of vetting your entire population of third party providers is a daunting task to say the least. Even if you are unaware that you are doing business with a company on the OFAC list, and even if you would stop doing business with a sanctioned supplier immediately upon learning their status, you are still at risk. This risk is significant and includes the threat of fines, reputation damage and even jail time. As evidenced in many of the cases from our survey
How can you protect yourself?
Protecting yourself can make all the difference! The majority of companies fined since 2012 had little or no OFAC controls in place, and they directly suffered as a result. Fortunately, there is a simple solution to eliminate your company’s risk, and to avoid doing business with disreputable, government sanctioned organizations. Lavante offers a simple on-demand solution that continually monitors your vendor file against the OFAC watch list. All potential matches from your supplier population are delivered to your specified parties directly through a configurable work-flow queue to help guide your end users through proper identification, disposition, and reporting.
Lavante’s OFAC monitoring capabilities can be sold as a stand-alone module within the larger Lavante SIM application – or it can be deployed as part of a complete suite of monitoring and compliance tools. Our suite of OFAC compliance products to market over 8 years ago, Lavante has helped hundreds of clients review millions of suppliers and thousands of potential matches. With the tools and support Lavante provides, our clients have never suffered a single inquiry from the U.S. Treasury pertaining to OFAC or any other watch list. Contact Lavante today and discover how you can achieve the same peace of mind.