Criminal Defense Lawyers

Documenting OFAC Sanctions Compliance Efforts

Staying on top of OFAC sanctions compliance can feel overwhelming for companies. There are a lot of moving parts and it’s crucial to document your compliance program. In this article, we’ll break down exactly how to document your OFAC sanctions compliance efforts so you can prove you’re doing your due diligence.

Conduct Regular Risk Assessments

A key part of any sanctions compliance program is conducting regular risk assessments. This allows you to identify potential risks and vulnerabilities in your processes so you can shore them up. Make sure to document your risk assessment methodology and results.

Some best practices for risk assessments include:

• Developing a risk rating system for new customers/accounts based on know-your-customer info and independent research
• Assessing risks associated with geography, customer type, products/services, etc.
• Identifying and rating risk scenarios like sanctions list matches
• Interviewing key staff in sales, customer service, etc. to get their insights
• Comparing your risks to peers in your industry
• Tracking risk assessment history so you can demonstrate improvement

Be sure to document all aspects of your risk assessment process, including the team involved, methodology, scenarios considered, results, recommendations, and follow-up.

Create Comprehensive Policies and Procedures

Your sanctions compliance policies and procedures manual is a key document that outlines your program. Make sure it’s comprehensive and covers all the bases, including:

• Program overview and objectives
• Risk assessment protocols
• Sanctions list screening procedures
• Escalation protocols for matches
• Due diligence requirements
• Training schedules
• Record retention policies
• Audit procedures

Having clear, documented policies and procedures makes OFAC comfortable that you understand compliance obligations and have controls in place. Be sure to keep them updated and train staff regularly.

Document Training and Certification

You need to train any staff who handle transactions, customers, or sanctions-sensitive data on OFAC requirements. Document your training program, including:

• Training schedule and frequency for new/existing staff
• Training topics covered
• Formats used (in-person, online, video, etc.)
• Assessments to confirm understanding
• Attendance logs and completion certificates
• Renewal/refresher timelines

Make sure staff certify in writing that they understand the policies and procedures. Having documentation of regular, comprehensive training shows OFAC you take education seriously.

Record Due Diligence Efforts

When you receive an alert on a potential sanctions match, documenting your due diligence is critical. Make sure to record details like:

• Date/time of alert
• Screening mechanism that flagged it
• Entity information
• Match reason
• Investigation steps
• Sources consulted
• Final determination
• Rationale
• Resolution notes

Thorough due diligence records demonstrate you investigate alerts appropriately before clearing transactions. Document everything in case OFAC later has questions.

Audit Your Program Regularly

Audits help ensure your sanctions program is working as intended. Schedule regular internal and third-party audits and document the process thoroughly, including:

• Audit scope
• Materials reviewed
• Interviews conducted
• Findings and recommendations
• Management responses
• Remediation plans
• Follow-up monitoring

Documenting audits shows OFAC you are proactively checking for program weaknesses. Be sure to demonstrate how you address any areas of improvement identified.

Report Issues Promptly

If you discover sanctions violations, promptly report them to OFAC, even if inadvertent. Document your disclosure process including:

• Date violation was identified
• Internal teams involved
• Initial notification to OFAC
• Formal disclosure submission
• Response tracking

Thorough documentation shows OFAC you take disclosure seriously. According to OFAC’s Enforcement Guidelines, voluntary self-disclosure can be a mitigating factor in potential penalties.

Regularly Update Everything

Sanctions programs evolve constantly, so documentation must be updated. Assign owners to ensure policies, procedures, risk assessments, training, etc. stay current. Out-of-date documentation undermines your program’s credibility.

Seek Legal Counsel

Documentation has legal implications, so engage counsel to ensure you’re protected. Lawyers can help craft appropriate record retention policies and privilege claims. Never destroy documents prematurely – OFAC can request records.

Centralize Program Records

Storing sanctions program documents in various silos makes program management difficult. Centralize records in a secure repository with role-based access controls so you can quickly find what you need.

Document Everything

It’s better to over-document than under-document your sanctions compliance program. You never know what OFAC may request to see. Thorough documentation also helps ensure continuity when staff turns over.

By taking the time to comprehensively document every aspect of your OFAC sanctions compliance program, you’ll have peace of mind that you can demonstrate your due diligence if questions ever arise.

References

• OFAC Framework for Compliance Commitments
• OFAC Sanctions FAQs
• OFAC Press Release on Compliance Framework
• OFAC Sanctions Compliance Guidance
• Gibson Dunn Summary of OFAC Compliance Framework
• Overview of OFAC Risk Assessments