THE BEST DEFENCE
Sanctions compliance may not be the biggest thing currently keeping C-suite executives up at night, but with regulators, most notably the US’s Office of Foreign Assets Control (OFAC), expecting more rigorous and far-reaching measures to be employed by all but the smallest businesses, that could well change.
In May 2019, OFAC published ‘A Framework for OFAC Compliance Commitments’, which provides a roadmap for senior management and compliance professionals to create a sanctions compliance programme which can withstand regulatory scrutiny.
The framework makes plain the return on investment of taking sanctions compliance seriously. Under OFAC’s enforcement guidelines, if a firm runs afoul of OFAC’s expectations, having an effective sanctions compliance programme and taking remedial steps can reduce the final civil monetary penalty. Most importantly, the framework notes that having an effective sanctions compliance programme may make the difference in the violations of sanctions requirements being considered ‘not egregious’. For the largest fines which can be imposed, that can cut the maximum amount of those financial penalties in half.
Management’s role
Management commitment, the first of five ‘essential components’ of the sanctions compliance programme outlined in OFAC’s framework, is undoubtedly its capstone. Without these steps, organisations would be left to wonder whether compliance is a company priority, or merely a box-ticking exercise.
OFAC suggests that management demonstrates its commitment to sanctions compliance by supporting the compliance function and by taking the reins when necessary. A way of demonstrating investment in sanctions compliance is by reviewing and approving the programme, and ensuring that corrective measures are applied when needed, whether they result in an enforcement action by OFAC or not.
Apr-Jun 2020 Issue
Dow Jones Risk & Compliance