Enforcement Actions & Reporting Obligations Flashcards

What is the purpose of OFAC's 'No Action Letter' process?

Answer: To allow parties to obtain informal guidance on whether a transaction is permissible

OFAC's No Action Letter process allows parties to request informal guidance on whether a specific transaction or activity would likely trigger an enforcement response.

Under the Iran sanctions program, a U.S. company discovers its foreign subsidiary completed a transaction involving an Iranian counterparty without U.S. person involvement. What is the most likely OFAC concern?

Answer: Potential violation of primary sanctions if the subsidiary is owned 50% or more by a U.S. person

U.S.-owned or controlled foreign entities are subject to primary Iran sanctions, so a foreign subsidiary majority-owned by a U.S. company can violate OFAC rules even without direct U.S. person involvement.

Which annual reporting requirement does OFAC impose on U.S. persons holding blocked property?

Answer: Annual reports by September 30 covering blocked property held as of June 30

OFAC requires U.S. persons holding blocked property to file annual reports by September 30 each year, covering blocked property held as of June 30 of that year.

An OFAC enforcement action results in a Finding of Violation rather than a penalty. What does this typically indicate?

Answer: The violation was technical, non-egregious, and the entity cooperated fully

A Finding of Violation is typically issued in non-egregious cases where there was full cooperation and the violation was technical or minor, serving as a formal notice without monetary penalty.

Under EU sanctions regulations, member states are primarily responsible for enforcement. What obligation does this create for multinational compliance programs?

Answer: Programs must account for differing national enforcement approaches within the EU framework

While EU sanctions are set at the bloc level, enforcement and penalties are determined by each member state, requiring multinationals to monitor varying national implementation and penalty structures.

A compliance officer receives a law enforcement request to keep a pending transaction open rather than blocking a payment to gather evidence. What is this called and what is the main risk?

Answer: A controlled delivery; risk of completing an illegal transaction

Controlled deliveries or 'don't block' requests carry the risk that the institution completes an otherwise illegal transaction, potentially creating its own liability despite law enforcement direction.

What is the statute of limitations for OFAC to bring a civil enforcement action for a sanctions violation?

Answer: 5 years from the date of the violation

OFAC has a 5-year statute of limitations to bring civil enforcement actions for sanctions violations, consistent with the general federal civil statute of limitations under 28 U.S.C. § 2462.