Overview of U.S. Economic and Trade Sanctions and Regulations

Materials herein are provided from the official web site of the U.S. Department of the Treasury – Office of Foreign Assets Control (OFAC)

The Office of Foreign Assets Control (OFAC) under the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals

What is a “prohibited transaction”?

Prohibited transactions are trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute. Because each program is based on different foreign policy and national security goals, prohibitions may vary between programs.

Are there exceptions to the prohibitions?

OFAC regulations often provide general licenses authorizing the performance of certain categories of transactions. OFAC also issues specific licenses on a case-by-case basis under certain limited situations and conditions.  In some cases, however, legislation may restrict that authority.

What must I do to get permission to trade with an embargoed country?

In some situations, authority to engage in certain transactions is provided by means of a general license. In instances where a general license does not exist, a written request for a specific license must be filed with OFAC. The request must conform to the procedures set out in the regulations pertaining to the particular sanctions program. Generally, application guidelines and requirements must be strictly followed, and all necessary information must be included in the application in order for OFAC to consider an application.

What questions should be asked when considering an export transaction?

What Countries are Involved in the Transaction?    What is being Exported?

Who are you Dealing with?    Is it a Prohibited Transaction?

Will the Transaction involve a Re-Export or Transshipment?

What countries do I need to worry about in terms of U.S. sanctions?

OFAC administers a number of U.S. economic sanctions and embargoes that target geographic regions and governments.

Comprehensive sanctions programs include Burma (Myanmar), Cuba, Iran and Sudan. 

Other non-comprehensive programs currently include the Western Balkans, Belarus, Cote d'Ivoire, Democratic Republic of the Congo, Iraq, Liberia (Former Regime of Charles Taylor), Persons Undermining the Sovereignty of Lebanon or Its Democratic Processes and Institutions, North Korea, Sierra Leone, Syria and Zimbabwe as well as other programs targeting individuals or entities that could be anywhere. 

What individuals or entities do I need to worry about in terms of U.S. sanctions?

Other sanctions programs relate to foreign narcotics traffickers, foreign terrorists, WMD proliferators. In addition to targeted countries, it is very important to note that OFAC publishes a list of Specially Designated Nationals and Blocked Persons (“SDN list”) which includes over 6,000 names of companies and individuals who are connected with the sanctions targets and are located throughout the world. A number of the named individuals and entities are known to move from country to country and may end up in locations where they would be least expected. U.S. persons are prohibited from dealing with SDNs wherever they are located and all SDN assets are blocked.

Because OFAC's programs are dynamic and constantly changing, it is very important to check OFAC's website on a regular basis to ensure that your SDN list is current and you have complete information regarding current restrictions affecting countries and parties with which you plan to do business.

If the commodity is “Dual-Use”, you need to check the Department of Commerce’s Bureau of Industry and Security lists:  Denied Persons List; Entity List, Unverified List.

If the commodity is a “Defense Article”, you need to check the Department of State’s Directorate of Defense Trade Controls lists:  Debarred List; Nonproliferation Sanctions List.

Who must comply with OFAC regulations?

All U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, such as those regarding Cuba and North Korea, all foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S. origin goods to comply.

How much are the fines for violating these regulations?

The fines for violations can be substantial. Depending on the program, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations. Depending on the program, civil penalties range from $250,000 or twice the amount of each underlying transaction to $1,075,000 for each violation.

OFAC has an exporter assistance phone line to assist exporters.  The number is 1-800-540-6322.