How OFAC Affects Importers and Exporters

Q.  What regulations does an importer or exporter need to know?

A.  Regulations restricting or preventing foreign commerce are published by the Treasury, Commerce and State Departments.

The main set of regulations is published by the Commerce Department, and is called the Export Administration Regulations (EAR).

The Commerce Department also publishes a frequently updated watch list called the BIS DPL that contains hundreds of individuals and businesses.

U.S. businesses wishing to import or export should incorporate checking of the watch list into their business processes.

Doing business with an entity on the BIS DPL list can result in large fines and other possible penalties.

Additionally, import/export restrictions can be based on source or destination country, product type or components, end use, and many other elements.

Commerce Dept website:   BIS Policies and Regulations

Q.  How does the OFAC SDN list affect this?

A.  The Office of Foreign Assets Control administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers.

As an exporter or importer, you should check all customers, exporters, and business partners against the OFAC list to avoid sanctions violations.

Doing business with entities on the watch lists can result in extremely large fines and other penalties, including loss of export privileges or prison.

Treasury Dept website:   OFAC Frequently Asked Questions

Q.  Which businesses need to pay attention to this list?

A.  All 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.

Treasury Dept website:   Who Must Comply With OFAC

Q.  How much can fines for sanctions violations be?

A.  The fines for violations can be substantial.  Depending on the program, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations.  Depending on the program, civil penalties range from $11,000 to $1,000,000 for each violation.

As an example, in August of 2007, the government announced that had paid a settlement of $182,750 for a sanction violation.  A number of other companies were fined over $200,000 in 2007 alone.

Treasury Dept website:   Fines For OFAC Violations

Q.  How can I ensure that my business stays in compliance?

A.  Verifilter continually monitors the relevant government watch lists, collecting them into a single, easy-to-search master list.  Subscribe to our service and you'll get instant access to our search facilities, including web-based checking and easy integration into your own web site.

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