OFAC

1
OFAC

• Why should I worry?

2
What is OFAC?

• Office of Foreign Asset Control
  (http//www.treas.gov/offices/enforcement/ofac/)
• Administers and enforces sanction policy, based
  on Presidential declaration of national
  security and nine basic statutes.

3
Comprehensive Sanctions Against

• Cuba
• Iran
• Sudan
• Terrorists
• Narcotics Traffickers

4
Limited Sanctions

• North Korea
• Syria
• Zimbabwe
• Proliferators of weapons of mass destruction.

• Balkans
• Burma (Myanmar)
• Diamond trading
• Iraq
• Liberia

5
Specially Designated Nationals (SDN)

• Sanctions target not only specific countries and
  their regimes, but also their parastatal
  organizations, front companies, high-ranking
  officials, and other agents worldwide.
• Master list of names of individuals, governmental
  entities, companies and merchant vessels located
  around the world.

6
Blocked Persons and Contracts

• Individuals, entities, or vessels appearing on
  OFACs SDN and Blocked Persons list
• Government entities and officials of Sudan or
  Cuba
• Companies located in Cuba
• Companies, wherever located, organized in or
  controlled from Cuba

7
Blocked Persons and Contracts

• Individuals, regardless of citizenship, currently
  residing in Cuba
• Cuban citizens, wherever located (except those
  legally residing in the United States, or
  unblocked by OFAC license).

8
Examples of prohibited or blocked transactions.

• Health insurance policy issued to citizen of
  Cuba
• Life insurance policy naming a resident of
  Havana, Cuba as beneficiary
• Aviation policy, issued to a non-blocked foreign
  airline, which names the Bank of Khartoum, a SDN
  of Sudan, as an additional named insured because
  the bank holds a mortgage on the aircraft

9
Examples of prohibited or blocked transactions.

• Marine hull policy covering potential damage to
  the Pinecone, a Cypriot-flag merchant vessel
  which has been named as a SDN of Cuba
• Cargo policy in which Valleta Shipping Corp. of
  Panama, a SDN of Cuba, is a named insured.
• Return of premium overpayment to a Cuban resident
  in France.

10
Examples of prohibited or blocked transactions.

• Liability policy covering the pharmaceutical
  operations of Laboratories Blanco Pharma S.A. of
  Bogota, Columbia, which has been named as a
  Specially Designated Narcotics Trafficker
• Reinsurance contract for policies underwritten in
  whole or in part by Banco Nacional de Cuba, a SDN
  of Cuba.

11
Illegal Facilitation and Other Prohibited
Services.

• Unlicensed imports and exports of goods and
  services to and from, and commercial activity in
  Iran, Sudan, and Cuba
• Unlicensed shipments of Iranian, Sudanese, or
  Cuban origin goods
• Imports of uncertified diamonds or any imports
  of diamonds from Liberia

12
Illegal Facilitation and Other Prohibited Services

• Imports of goods, technology, or services
  produced or provided by foreign persons
  designated by the Secretary of State who promote
  proliferation of weapons of mass destruction.

13
Examples of insurance transactions.

• Property insurance policy written for an
  international hotel chain which covers hotels in
  Tehran, Iran
• Marine cargo or goods in transit policy
  insuring a shipment of Iranian crude oil shipped
  from Egyptian ports to a Spanish buyer
• Aviation policy known to cover scheduled stops in
  Havana, Cuba by a foreign air carrier.

14
How can I protect my Company?
15
Limit Your Exposure

• Create a compliance program.
• Appoint a Compliance Committee.
• Perform self-audit.
• Create procedures.

16
Ongoing Compliance

• Review new business.
• Review claimants, providers, contractors,
  vendors, etc. before payment is made.
• Conduct at least annual scrub of business.

17
Staying up-to-date

• Review program at least annually.
• Review Treasury Department bulletins and news
  releases.

18
What happens if we dont follow the requirements?

• GasTech Engineering Corporation.
• Super Micro Computers, Inc.
• Guidant Corporation.
• Varian, Inc.

19
Questions?