InTents June/July 2022 - 45

Framework, as it lays out guidelines for
companies to follow when creating a sanctions
compliance program (SCP). Although
such a program is not mandatory, OFAC
" strongly encourages organizations subject
to U.S. jurisdiction, as well as foreign
entities that conduct business in or with
the United States, U.S. persons, or using
U.S.-origin goods or services, to employ a
risk-based approach to sanctions compliance
by developing, implementing, and
routinely updating a sanctions compliance
program (SCP). "
The reason OFAC encourages all companies
to develop a SCP is because U.S.
sanctions apply to all U.S. companies and
citizens regardless of where activities
may occur or through whom they may
occur. " You can't do through others what
you're not allowed to do directly, " Heath
explained. " You cannot conduct a transaction
through a third party as a 'workaround'
to avoid sanctions. "
OFAC notes that many sanctions violations
occur due to a misunderstanding of
the regulations. Something as seemingly
innocuous as referring business opportunities
to a sanctioned country is considered
a violation.
" Consider whether your organization
has the structure in place to assess your
Russian and Ukrainian touch points-the
due diligence you need to do on customers,
vendors and suppliers as well as the training
that your personnel needs to spot the
red lags and ensure nothing slips through, "
Heath counseled.
He also noted that these sanctions will
likely lead to increased trade between
Russia and China and encouraged companies
to subject any dealings with China
to increased scrutiny to avoid inadvertently
facilitating sanctions violations.
Compliance
To limit the risk of indirectly violating
sanctions, experts recommend companies
thoroughly examine their customers,
suppliers, intermediaries and counterparties
and take a risk-based approach
when designing or updating a SCP for
their staff to use. They should conduct a
routine risk assessment to identify potential
OFAC issues, particularly during any
company mergers or acquisitions.
OFAC notes that " Senior Management's
commitment to, and support of, an
organization's risk-based SCP is one of the
most important factors in determining
its success. This support is essential
in ensuring the SCP receives adequate
resources and is fully integrated into the
organization's daily operations, and also
helps legitimize the program, empower
its personnel, and foster a culture of
compliance throughout the organization. "
Resources are available online to
help companies avoid running afoul of
these sweeping sanctions. A good place
to start is by researching " 2019 OFAC
Compliance. " Read the PDF ile the U.S.
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Department of Treasury has posted titled
" A Framework for OFAC Compliance
Commitments. " This document provides
an overview of what elements need to
be contained for a company's SCP to be
considered " effective. "
Failure to ask the right questions and
do your due diligence is no defense
against prosecution. Ultimately, the
best safeguard for your business
and employees is having an internal
compliance system. If your company
imports or exports any products, you
should assume there is at least some
risk of an indirect violation and take the
time to implement an effective SCP if you
don't already have one in place.
Jesse Madden is the editor of InTents magazine.
She can be reached at JMMadden@ifai.com.
This article was written at the end of March
2022. Given the speed with which the situation
has been unfolding, it is possible that some
of the details it contains may have changed.
Please consult the government agencies
listed for the most current information.
InTentsMag.com 45
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