11. Who must comply with OFAC sanctions?
All U.S. persons must comply with OFAC sanctions, including all U.S. citizens and permanent residents regardless of where they are located, all individuals and entities within the United States, and all U.S. incorporated entities and their foreign branches. Terms such as "U.S. person" and "person subject to U.S. jurisdiction" are defined in the implementing regulations for a particular sanctions program in 31 CFR chapter V. (See e.g., 31 CFR § 560.314 (Iranian Transactions and Sanctions Regulations (ITSR)); 31 CFR § 598.318 (Foreign Narcotics Kingpin Sanctions Regulations). In the case of certain programs, foreign subsidiaries owned or controlled by U.S. persons also must comply. (See e.g., 31 CFR § 560.215 (ITSR); 31 CFR § 510.214 (North Korea Sanctions Regulations)). Non-U.S. persons are also subject to certain sanctions prohibitions. For example, non-U.S. persons are prohibited from causing or conspiring to cause U.S. persons to violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. Certain programs also require foreign persons reexporting certain goods, technology, or services from the United States to comply with U.S. sanctions, even if no U.S. persons are involved in the reexport.
Date Updated: August 21, 2024.
Updated on Aug 21, 2024
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11. Who must comply with OFAC regulations?
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, 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. [01-15-15]
1) FAQ amended on 8-21-24 concurrent with Modernizing Treasury’s Office of Foreign Assets Control (Press Release), detailing several modernization efforts, including the updating of a number of general interest FAQs containing dated language. This FAQ does not appear to provide guidance in a way that adds to or deviates from OFAC’s other modern guidance. This FAQ was amended to add language clarifying, among other things, how OFAC’s prohibitions apply to non-U.S. persons. The reference to “foreign persons reexporting certain goods, technology, or services from the United States to comply with U.S. sanctions, even if no U.S. persons are involved in the reexport” includes 515.201 (CACR) and 560.205 (ITSR). The comments below were drafted (not amended) prior to the 8-21-24 amendment.
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Notes:
1) OFAC describes the range of persons ordinarily considered to be subject to sanctions prohibitions.
In reality, the practice of OFAC (and the DOJ) of penalizing non-U.S. persons not subject to the sanctions prohibitions for “causing” U.S. persons to violate those provisions has become so aggressive to render obsolete that notion that such entities do not need to “comply” with the prohibitions. See e.g. Civil Enforcement Information - Barclays Bank Plc (Second action) (2016), where OFAC penalizes a non-U.S. bank for not performing sufficient due diligence with respect to one of its non-U.S. customers prior to processing USD-denominated transactions for that person. This is of course to say nothing of "secondary sanctions" and derivative designations, with respect to which persons not subject to primary sanctions prohibitions can nevertheless be blocked or otherwise sanctioned for engaging in ordinary commercial transactions with sanctions targets.
2) Note that the term “comply,” as used in this context by OFAC, does not include non-U.S. person measures to mitigate the risk of sanctions under OFAC’s secondary sanctions and targeting authorities. “Compliance,” as commonly used by OFAC, refers to ensuring that one does not engage in unlawful conduct.