OFAC: Understanding and Protection Against Risks in the World of International Finance
The world of business is becoming increasingly interconnected. Companies are entering foreign markets, expanding partnership networks, hiring international contractors. In this pursuit of growth and efficiency, an important point is often overlooked — legal risks hidden behind geopolitics.
Sanctions have become an integral part of modern foreign policy, and in this context, the Office of Foreign Assets Control of the USA — OFAC plays a key role. This agency not only forms the list of sanctioned individuals and organizations but also regulates the entire spectrum of economic operations that are directly or indirectly connected with the USA. Even if your company does not work with American clients directly, it does not mean that risks are absent.
What is OFAC and how does it work?
OFAC is a division of the U.S. Department of the Treasury responsible for administering sanctions programs. Its mission is to use economic restrictions as a tool of foreign policy and national security protection.
OFAC sanctions apply not only to U.S. citizens and companies. If a business uses dollar settlements, operates through banks with correspondent accounts in the U.S., or provides services to persons associated with sanctioned regimes, it also falls under OFAC’s jurisdiction.
Main types of sanctions:
- Comprehensive sanctions are applied to entire states (for example, Iran, Cuba, North Korea).
- Sanctions by lists — against individuals and organizations (inclusion in the SDN List).
- Sectoral sanctions are restrictions for companies from certain sectors of the economy.
- Secondary sanctions are applied to non-American companies for interacting with sanctioned entities.
Violation of OFAC rules can result in serious consequences: from multimillion-dollar fines and asset freezes to criminal cases and complete isolation from the international banking system.
Sanction risks in the financial sector: accounting under attack
At first glance, it may seem that accounting and payroll services are outside the risk zone. But in practice, they often become the point of intersection with sanctions.
Financial providers process payments, conduct settlements, interact with banks and clients worldwide. Any of these operations can accidentally involve a sanctioned element — and turn into a serious problem.
Where the risks lie:
- Onboarding clients without proper verification (KYC/KYB). Insufficient verification may lead to servicing a client included in the SDN List.
- Transfers through sanctioned banks. Even if the client is not under sanctions, but transactions go through a bank that is under sanctions, the funds may be blocked.
- Services for sanctioned individuals. Accounting, payroll calculation, tax consultations — if this is done for an SDN person, it is already a violation.
- Currency operations in US dollars. Even if a company is registered in another country but uses dollars, it already falls under the scope of OFAC.
How to build an effective defense against OFAC risks
Under the conditions of sanction pressure, compliance becomes not a formality but an urgent necessity. It is a matter not only of reputation but also of the survival of business on the international stage.
Elements of a strong OFAC program:
- Transparent leadership position — compliance starts from the top.
- Risk assessment is regular analytics of foreign economic and payment operations.
- Control of clients and counterparties — verification through sanction lists, KYC, beneficiaries.
- Monitoring transactions — filtering operations by jurisdictions and currencies.
- Training personnel — so that every employee understands where a sanctions threat may arise.
- Audit and stress tests — to identify weak points in time and strengthen protection.
Invest in compliance — invest in sustainability
OFAC sanctions are not a theoretical threat. This is a reality that companies from various sectors are already facing. Accounting, clearing centers, exporters, contractors — all of them can come under attack if a competent risk management system is not built in time.
The example of Counting House Services proves: no one is insured. But there is a way to prepare — a proactive, conscious approach to sanctions compliance.
Right now is the best time to review your strategy, adjust internal processes, and ensure that your company is ready for the challenges of global financial regulation.
