The Office of Foreign Assets Control (OFAC) is a
financial intelligence
Financial intelligence (FININT) is the gathering of information about the financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions. Generally the term applies in the context of law enfo ...
and enforcement agency of the
U.S. Treasury Department
The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...
. It administers and enforces economic and trade
sanctions in support of U.S.
national security and
foreign policy objectives.
Under Presidential national emergency powers, OFAC carries out its activities against foreign states as well as a variety of other organizations and individuals, like terrorist groups, deemed to be a threat to U.S. national security.
As a component of the
U.S. Treasury Department
The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...
, OFAC operates under the
Office of Terrorism and Financial Intelligence The Office of Terrorism and Financial Intelligence (TFI), formed in 2004, is an agency of the United States Department of the Treasury. TFI works to reduce the use of the financial system for illicit activities by terrorists (groups and state-sponso ...
and is primarily composed of intelligence targeters and lawyers. While many of OFAC's targets are broadly set by the
White House
The White House is the official residence and workplace of the president of the United States. It is located at 1600 Pennsylvania Avenue NW in Washington, D.C., and has been the residence of every U.S. president since John Adams in ...
, most individual cases are developed as a result of investigations by OFAC's Office of Global Targeting (OGT).
[Yukhananov, Anna, and Warren Strobel]
"After Success on Iran, U.S. Treasury's Sanctions Team Faces New Challenges"
Reuters
Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world.
The agency was esta ...
, April 14, 2014.
Sometimes described as one of the "most powerful yet unknown" government agencies,
OFAC was founded in 1950 and has the power to levy significant penalties against entities that defy its directives, including imposing fines, freezing assets, and barring parties from operating in the United States. In 2014, OFAC reached a record $963 million settlement with the French bank
BNP Paribas, which was a portion of an $8.9 billion penalty imposed in relation to the case as a whole.
History
Involvement of the U.S. Department of the Treasury in economic sanctions against foreign states dates to the
War of 1812
The War of 1812 (18 June 1812 – 17 February 1815) was fought by the United States, United States of America and its Indigenous peoples of the Americas, indigenous allies against the United Kingdom of Great Britain and Ireland, United Kingdom ...
, when Secretary
Albert Gallatin
Abraham Alfonse Albert Gallatin (January 29, 1761 – August 12, 1849) was a Genevan–American politician, diplomat, ethnologist and linguist. Often described as "America's Swiss Founding Father", he was a leading figure in the early years o ...
administered sanctions against the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
in retaliation for the
impressment
Impressment, colloquially "the press" or the "press gang", is the taking of men into a military or naval force by compulsion, with or without notice. European navies of several nations used forced recruitment by various means. The large size of ...
of American sailors.
The Division of Foreign Assets Control, the immediate predecessor to OFAC, was established in December 1950. Predecessor agencies of the Division of Foreign Assets Control include Foreign Funds Control, which existed from 1940 to 1947, and the Office of International Finance (1947 to 1950). OFAC's earliest predecessor, Foreign Funds Control, was established by
Executive Order 8389 as a unit of the Office of the Secretary of the Treasury on April 10, 1940. The authority to establish Foreign Funds Control was derived from the
Trading with the Enemy Act 1917. Among other operations, Foreign Funds Control administered wartime import controls over enemy assets and restrictions on trade with enemy states. It also participated in administering the
Proclaimed List of Certain Blocked Nationals, or the "Black List", and took
censuses of foreign-owned assets in the United States and American-owned assets abroad. Foreign Funds Control was abolished in 1947, with its functions transferred to the newly established
Office of International Finance
An office is a space where an organization's employees perform administrative work in order to support and realize objects and goals of the organization. The word "office" may also denote a position within an organization with specific dut ...
(OIF). In 1948, OIF activities relating to blocked foreign funds were transferred to the Office of Alien Property, an agency within the
Department of Justice
A justice ministry, ministry of justice, or department of justice is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...
.
The Division of Foreign Assets Control was established in the Office of International Finance by a Treasury Department order in 1950, following the entry of the
People's Republic of China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
into the
Korean War
, date = {{Ubl, 25 June 1950 – 27 July 1953 (''de facto'')({{Age in years, months, weeks and days, month1=6, day1=25, year1=1950, month2=7, day2=27, year2=1953), 25 June 1950 – present (''de jure'')({{Age in years, months, weeks a ...
; President
Harry S. Truman
Harry S. Truman (May 8, 1884December 26, 1972) was the 33rd president of the United States, serving from 1945 to 1953. A leader of the Democratic Party, he previously served as the 34th vice president from January to April 1945 under Franklin ...
declared a
national emergency
A state of emergency is a situation in which a government is empowered to be able to put through policies that it would normally not be permitted to do, for the safety and protection of its citizens. A government can declare such a state du ...
and blocked all Chinese and North Korean assets subject to U.S. jurisdiction. In addition to blocking Chinese and
North Korea
North Korea, officially the Democratic People's Republic of Korea (DPRK), is a country in East Asia. It constitutes the northern half of the Korean Peninsula and shares borders with China and Russia to the north, at the Yalu (Amnok) and T ...
n assets, the Division administered certain regulations and orders issued under the amended Trading with the Enemy Act.
On October 15, 1962, by a Treasury Department order, the Division of Foreign Assets Control became the Office of Foreign Assets Control.
Authority and activities
In addition to the
Trading with the Enemy Act
Trading with the Enemy Act is a stock short title used for legislation in the United Kingdom and the United States relating to trading with the enemy.
''Trading with the Enemy Acts'' is also a generic name for a class of legislation generally pas ...
and the various
national emergencies currently in effect, OFAC derives its authority from a variety of
U.S. federal laws, particularly the
International Emergency Economic Powers Act
The International Emergency Economic Powers Act (IEEPA), Title II of , is a United States federal law authorizing the president to regulate international commerce after declaring a national emergency in response to any unusual and extraordinary t ...
(IEEPA), regarding
embargo
Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they m ...
es and economic sanctions.
In enforcing economic sanctions, OFAC acts to prevent "prohibited transactions", which are described by OFAC as "trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute". OFAC has the authority to grant exemptions to prohibitions on such transactions, either by issuing a general license for certain categories of transactions, or by specific licenses issued on a case-by-case basis.
OFAC administers and enforces economic sanctions programs against countries, businesses or groups of individuals, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. See
United States embargoes
United may refer to:
Places
* United, Pennsylvania, an unincorporated community
* United, West Virginia, an unincorporated community
Arts and entertainment Films
* ''United'' (2003 film), a Norwegian film
* ''United'' (2011 film), a BBC Two fi ...
for a list of affected countries.
Under the
International Emergency Economic Powers Act
The International Emergency Economic Powers Act (IEEPA), Title II of , is a United States federal law authorizing the president to regulate international commerce after declaring a national emergency in response to any unusual and extraordinary t ...
(IEEPA), the
U.S. President
The president of the United States (POTUS) is the head of state and head of government of the United States of America. The president directs the executive branch of the federal government and is the commander-in-chief of the United States ...
is empowered during national emergencies to block the removal of foreign assets under the jurisdiction of the United States. That mandate is executed by OFAC by issuing regulations that direct financial institutions accordingly.
Between 1994 and 2003, OFAC collected over $8 million in violations of the
Cuban embargo, against just under $10,000 for
terrorism financing
Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors.
Most countries have implemented measures to counter terrorism financing (CTF) often as part of their money laundering la ...
violations. It had ten times more agents assigned to tracking financial activities relating to Cuba than to
Osama Bin Laden.
As part of its efforts to support the
Iraq sanctions
The sanctions against Iraq were a comprehensive financial and trade embargo imposed by the United Nations Security Council (UNSC) on Iraq. They began August 6, 1990, four days after Iraq's invasion of Kuwait, stayed largely in force until May 22, ...
, in 2005, OFAC fined
Voices in the Wilderness $20,000 for gifting medicine and other humanitarian supplies to Iraqis. In a similar case, OFAC imposed and attempted to collect a $10,000 fine, plus interest, against peace activist Bert Sacks for taking medicine to residents of
Basra
Basra ( ar, ٱلْبَصْرَة, al-Baṣrah) is an Iraqi city located on the Shatt al-Arab. It had an estimated population of 1.4 million in 2018. Basra is also Iraq's main port, although it does not have deep water access, which is han ...
; charges against Sacks were dismissed by the court in December 2012.
In October 2007, a set of Spanish travel agency websites had their domain name access disabled by
eNom
Enom, Inc. is a domain name registrar and Web hosting company that also sells other products closely tied to domain names, such as SSL certificates, e-mail services, and Website building software. As of May 2016, it manages over 15 million domai ...
: the domain names had been on the OFAC blacklist.
When queried, the U.S. Treasury referred to a 2004 press release that claimed the company "had helped Americans evade restrictions on travel to Cuba".
In the case of ''
United States v. Banki'', on June 5, 2010, a U.S. citizen was convicted of violating the
Iran Trade Embargo for failing to request Iranian currency transfer licenses in advance from OFAC. On August 25, 2010, the
Iranian American Bar Association announced that it would file an
amicus curiae brief with the
Court of Appeals for the Second Circuit
The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory comprises the states of Connecticut, New York and Vermont. The court has appellate juris ...
on ''United States v. Banki''. It has also hired lawyers to request further guidance from OFAC on import of goods from Iran.
Appointment as director is not subject to
Senate confirmation.
[Rubenfeld, Samuel]
"U.S. Treasury Appoints OFAC Director Without Fanfare"
''Wall Street Journal'', March 17, 2017. First public mention: March 14, 2017. Retrieved 2017-03-17.
Specially Designated Nationals
OFAC publishes a list of Specially Designated Nationals (SDNs), which lists people, organizations, and vessels with whom
U.S. citizens and
permanent residents
Permanent residency is a person's legal resident status in a country or territory of which such person is not a citizen but where they have the right to reside on a permanent basis. This is usually for a permanent period; a person with such ...
are prohibited from doing business.
This list differs from the list maintained pursuant to Section 314(a) of the
Patriot Act
The USA PATRIOT Act (commonly known as the Patriot Act) was a landmark Act of the United States Congress, signed into law by President George W. Bush. The formal name of the statute is the Uniting and Strengthening America by Providing Appro ...
.
When an entity or individual is placed on the SDN list it can petition OFAC to reconsider. But OFAC is not required to remove an individual or entity from the SDN list. Two federal court cases have found the current Treasury/OFAC process to be constitutionally deficient.
In August 2009, a federal court ruling in ''
KindHearts
KindHearts for Charitable Humanitarian Development, "KindHearts", was a non-governmental organization operating out of Toledo, Ohio. The organization's stated goal was to provide "humanitarian aid without regard to religious or political affilia ...
v. Treasury'' found that Treasury's seizure of KindHearts assets without notice or means of appeal is a violation of the
Fourth and
Fifth Amendments.
On September 23, 2011, the
Ninth Circuit Court of Appeals
The United States Court of Appeals for the Ninth Circuit (in case citations, 9th Cir.) is the U.S. federal court of appeals that has appellate jurisdiction over the U.S. district courts in the following federal judicial districts:
* District ...
upheld a lower court's ruling that procedures used by Treasury to shut down the Oregon-based
Al Haramain Islamic Foundation in 2004 was unconstitutional. The court said the Fifth Amendment's guarantee of
due process required Treasury to give adequate notice of the reasons it puts a group on the terrorist list, as well as a meaningful opportunity to respond. In addition, the court ruled that freezing the group's assets amounts to a seizure under the Fourth Amendment, so that a court order is required.
As of October 7, 2015, the SDN List had more than 15,200 entries from 155 countries. Of those, 178 entries were for aircraft and 575 entries were for ships ("vessels"). The remaining 14,467 entries were for designated individuals and organizations. OFAC creates separate entries in the SDN list for each alias of a designee, so the number of entries does not reflect the number of designees.
On September 21, 2021, a cryptocurrency exchange was included in the sanctions list for first time for helping launder illicit funds having source from
ransomware attacks. The amounts laundered are more than $160 million between 2018 and 2021.
Sectoral Sanctions Identifications
OFAC publishes a list of Sectoral Sanctions Identifications (SSI), which lists persons, companies, and entities in sectors of the Russian economy (especially energy, finance, and armaments), prohibiting certain types of activity with these individuals or entities by United States persons, wherever located.
This list is maintained following the issuance of EO
13662 ''Blocking Property of Additional Persons Contributing to the Situation in Ukraine'' on March 20, 2014, in accordance with 79 FR 16167.
On August 13, 2014, the United States Department of Treasury issued guidance for entities under sectoral sanctions. United States increased the number of entities on the sectoral sanctions identifications list by adding subsidiaries of entities under sectoral sanctions that hold 50% or greater ownership by an entity under sectoral sanctions either individually or in the aggregate, either directly or indirectly. Also, US persons cannot use a third party intermediary and they must use caution during "transactions with a non-blocked entity in which one or more blocked persons has a significant ownership interest that is less than 50% or which one or more blocked persons may control by means other than a majority ownership interest."
On December 22, 2015, the United States Department of Treasury explicitly listed all entities and their subsidiaries on the sectoral sanctions identifications list using a human readable search.
Sanctions programs
As of August 8, 2020, OFAC was administering the following sanctions programs:
[
]
''Table note: The numbers of individuals, companies, vessels, and aircraft are taken from the
SDN List. However, any single entry on that list may be a target of multiple sanctions programs, so summing lines of the table will inflate the true sum due to duplication.''
See also
*
Anti-money laundering
Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdicti ...
*
Hawala
Hawala or hewala ( ar, حِوالة , meaning ''transfer'' or sometimes ''trust''), also known as in Persian, and or in Somali, is a popular and informal value transfer system based on the performance and honour of a huge network of money ...
*
Title 31 of the Code of Federal Regulations CFR Title 31 - Money and Finance: Treasury is one of fifty titles comprising the United States Code of Federal Regulations (CFR). Title 31 is the principal set of rules and regulations issued by federal agencies of the United States regarding mone ...
*
U.S. sanctions against Iran
*
United States embargoes
United may refer to:
Places
* United, Pennsylvania, an unincorporated community
* United, West Virginia, an unincorporated community
Arts and entertainment Films
* ''United'' (2003 film), a Norwegian film
* ''United'' (2011 film), a BBC Two fi ...
*
Specially Designated Nationals and Blocked Persons List
The Specially Designated Nationals and Blocked Persons List, also known as the SDN List, is a United States government sanctions/embargo measure targeting U.S.-designated terrorists, officials and beneficiaries of certain authoritarian regimes, a ...
Further reading
* Bryan R. Early & Keith A. Preble (2020) "
Going Fishing versus Hunting Whales: Explaining Changes in How the US Enforces Economic Sanctions." ''Security Studies.''
References
External links
*
*
{{authority control
Government agencies established in 1950
International sanctions
Export and import control
Foreign Assets Control
Union of Good
1950 establishments in the United States