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Responding to an OFAC Compliance Investigation

Dealing with an OFAC (Office of Foreign Assets Control) compliance investigation can be intimidating. But with the right preparation and approach, you can get through it. This article provides practical tips and info to guide you through the process.

What Triggers an OFAC Investigation

There are a few common triggers for an OFAC investigation[1]:

  • Blocking reports filed by financial institutions
  • Company self-disclosures of potential violations
  • Tips from competitors or disgruntled employees
  • Information sharing from other government agencies
  • OFAC’s own research and monitoring efforts

So if your company files a blocking report, makes a voluntary self-disclosure, or is the subject of a tip, expect OFAC to come knocking.

The Investigation Process

The OFAC investigation process typically involves[2]:

  1. An administrative subpoena requesting info
  2. Your written response to the subpoena
  3. Follow-up info requests from OFAC
  4. A final enforcement action (or no action)

After receiving a subpoena, you’ll need to respond within 30 days (though extensions are common). OFAC will review your response and likely request clarification or additional documents. This back-and-forth may repeat several times over months or years.

OFAC’s final action depends on the nature and severity of any violations, using factors like:

  • Willfulness or recklessness
  • Harm or risk of harm to sanctions program objectives
  • Awareness of conduct at issue
  • Compliance program strength
  • Remedial response

Responding to the Subpoena

Carefully responding to the initial OFAC subpoena is crucial. Some tips:

Christine Twomey
Christine Twomey
2024-03-21
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Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
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Keisha Parris
2024-03-15
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Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
Very professional, very transparent, over all a great experience
Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.
  • Don’t ignore or delay – respond promptly within the 30 day deadline
  • Be comprehensive – leave no requested stone unturned
  • Take it seriously – this is your chance to make a good first impression
  • Consider hiring legal counsel to assist with the response
  • Provide organized, indexed, searchable data[3]
  • Clearly explain any tech difficulties in collecting data
  • Use the response as an opportunity to demonstrate your willingness to cooperate fully

A well-organized, timely, transparent subpoena response lays the groundwork for the best possible outcome.

Cooperating with OFAC

Maintaining a cooperative working relationship with OFAC throughout the investigation is key. This means[4]:

  • Being responsive – reply to all OFAC requests timely
  • Staying engaged – maintain an open dialogue with investigators
  • Being transparent – don’t hide anything; err on side of oversharing
  • Explaining any delays or difficulties in providing info
  • Making earnest efforts to resolve OFAC’s concerns

The more responsive, engaged, and transparent you are, the more likely OFAC will treat you leniently if violations occurred.

Potential Investigation Outcomes

There are a range of potential outcomes from an OFAC investigation[5]:

  • No Action – OFAC finds insufficient evidence of violations
  • Cautionary Letter – OFAC identifies concerning activity but doesn’t penalize
  • Finding of Violation – OFAC determines a violation occurred but issues no penalty
  • Civil Monetary Penalty – A fine based on violation severity
  • Referral for Criminal Charges – Egregious sanctions evasion or deception may lead to criminal prosecution

Over half of OFAC investigations end with no action or just a cautionary letter. So violations don’t necessarily mean you’ll incur penalties if you cooperate fully.

Best Practices for a Positive Outcome

Follow these best practices to maximize your chances of a positive OFAC investigation outcome:

  • Respond to the subpoena completely and promptly
  • Be transparent; provide all relevant info even if not explicitly requested
  • Stay engaged and cooperative with OFAC throughout
  • Explain any difficulties in detail; don’t appear evasive
  • Emphasize your sanctions compliance program improvements
  • Express willingness to settle any concerns
  • Stay calm and consult counsel experienced with OFAC

With preparation, cooperation, and the right help, you can resolve an OFAC investigation with minimal pain.

Takeaways

  • Move quickly to respond to OFAC subpoenas comprehensively
  • Maintain an open, cooperative dialogue with investigators
  • Emphasize compliance program enhancements and settlement willingness
  • Penalties aren’t guaranteed; over half of cases end without them
  • Document everything thoroughly – keep meticulous records of all correspondence and information provided
  • Be proactive with compliance before issues arise – don’t wait for an investigation to optimize compliance
  • Designate an internal point person to coordinate response – don’t let the process fall between the cracks
  • Consider seeking OFAC’s guidance in advance if unsure of obligations
  • Self-disclose issues appropriately – OFAC may look more favorably on voluntary disclosures

With the right preparation and mindset, an OFAC investigation doesn’t have to be feared. View it as an opportunity to showcase your compliance program and willingness to collaborate. And consult experienced counsel to make the process as painless as possible.

References

[1] When You Got It, Flaunt It: Enforcement Authorities Expect Companies, Including Banks and Cryptocurrency Exchanges, That Collect Geolocation Data to Use It for Sanctions Compliance

[2] U5L1-Spell-Checker.xml – The Beauty and Joy of Computing

[3] Sr. Sanctions Compliance Program Manager – Paxos

[4] the of and to a in for is on s that by this with i you it not – Massachusetts Institute of Technology

[5] [PDF] Case 1:18-mc-00176-BAH *SEALED* Document 61-11 Filed 08/12/20 Page 1 of 40 – United States District Court for the District of Columbia

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