Office of Foreign Assets Control

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Office of Foreign Assets Control
Logo of the U.S. Office of Foreign Assets Control (OFAC).jpg
Agency overview
Formed December 1950
Preceding
  • Office of Foreign Funds Control
Headquarters Washington, DC
Employees Approximately 200 (2013)[1]
Annual budget $30.9 million (2013)
Agency executive
  • Adam Szubin[2]
Parent department Department of the Treasury

The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. government charged with planning and execution of economic and trade sanctions in support of U.S. national security and foreign policy objectives. Acting under Presidential national emergency powers, OFAC carries out its activities against foreign states as well as a variety of problematic organizations and individuals deemed to be a threat to U.S. national security.[3]

A component of the U.S. Treasury Department, OFAC operates under the auspices of the Office of Terrorism and Financial Intelligence and is primarily composed of intelligence targeters and lawyers. While many of OFAC's targets are broadly set by the White House, most individual cases are developed as a result of lengthy investigations by OFAC's Office of Global Targeting (OGT).[4]

Often described as one of the most powerful yet unknown government agencies,[4][5] OFAC has been in existence for more than a half-century and is playing an increasingly significant role as a foreign policy lever of the U.S. government. The agency is empowered to levy significant penalties against entities that defy it, including imposing colossal fines, freezing assets, and altogether barring parties from operating in the U.S. Notably, in 2014, OFAC reached a record $1 billion settlement with the French BNP Paribas, which was a portion of approximately $9 billion penalty imposed in relation to the case as a whole.[6]

History

Involvement of the U.S. Department of the Treasury in economic sanctions against foreign states dates to the War of 1812, when Secretary Albert Gallatin administered sanctions against Great Britain in retaliation for the harassment of American sailors.[3][7]

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 (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.[8]

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 into the Korean War; President Harry S Truman declared a national emergency and blocked all Chinese and North Korean assets subject to U.S. jurisdiction. In addition to blocking Chinese and North Korean assets, the Division administered certain regulations and orders issued under the amended Trading with the Enemy Act.[7]

On October 15, 1962, by a Treasury Department order, the Division of Foreign Assets Control became the Office of Foreign Assets Control.[8]

Authority and activities

In addition to the Trading with the Enemy Act and the various national emergencies currently in effect, OFAC derives its authority from a variety of U.S. federal laws regarding embargoes and economic sanctions.[9]

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.[7] 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 for a list of affected countries.

OFAC is headquartered in the Treasury Annex, located on the corner of Pennsylvania Avenue and Madison Place, N.W., in Washington, D.C.

Under the International Emergency Economic Powers Act (IEEPA), the President 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 then executed by OFAC through issue of regulations that direct financial institutions accordingly.

Between 1994 and 2003, OFAC collected over $8m in violations of the Cuban embargo, against just under $10,000 for terrorism financing violations. It had ten times more agents assigned to tracking financial activities relating to Cuba than to Osama Bin Laden.[10]

As part of its efforts to support the Iraq sanctions, in 2005, OFAC fined Voices in the Wilderness $20,000 for gifting medicine and other humanitarian supplies to Iraqis.[11] In a similar case, OFAC is still attempting to collect (as of 2011) a $10,000 fine, plus interest, against Bert Sacks for bringing medicine to residents of Basra.[12]

In October 2007, a set of Spanish travel agency websites had their domain name access disabled by eNom: the domain names had been on the OFAC blacklist.[13][14] When queried, the United States Treasury referred to a 2004 press release that claimed the company "had helped Americans evade restrictions on travel to Cuba".[13]

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 United States Court of Appeals for the Second Circuit on United States v. Banki.[15] It has also hired lawyers to request further guidance from OFAC on import of goods from Iran.[16]

Sanctions programs

Lua error in package.lua at line 80: module 'strict' not found. As of November 10, 2015, OFAC was administering the following sanctions programs:[17]

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.

Tag Last updated Sanctions program Individuals Companies Vessels Aircraft 31 CFR CFR date EO EO
[561LIST] Iran Financial - - - - 561[18]
[BALKANS] Balkans related[19] 229 - - - 588[20] 13304[21]
[BELARUS] Belarus 208 - - - 548 13405
[BPI-PA] Patriot Act[22] - - - -
[BPI-SDNTK] Narcotics related[23] - - - - 598
[BURMA] Myanmar related 219 - - - 537 13448 13464
[CAR] Central African Republic 39 - - - 553
[COTED] Cote d'Ivoire 9 - - - 543
[CUBA] Cuban Assets Control 220 - 5 - 515
[CYBER] Computer hacking related - - - - 13694[24]
[DARFUR] Darfur 28 3 - - 546
[DPRK] North Korea 7 44 20 - 510 13551
[DPRK2] North Korea related 10 16 - - 13687
[DRCONGO] Democratic Republic of the Congo 106 27 - - 547
[EO13622] Iran related 17 6 - - 13622[25]
[EO13645] Iran related 9 10 9 - 13645[26]
[FSE-IR] Iran sanctions evaders 3 2 - - 13608[27]
[FSE-SY] Syria sanctions evaders - - - - 13608[27]
[FSE-WMD] WMD related[28] - - - - 13608[27]
[FSE-SDGT] Terrorism related[29] - - - - 13608[27]
[FTO] Terrorism related[30] - 552 - - 597
[HRIT-IR] Iran human rights - 26 - - 13606[31]
[HRIT-SY] Syria human rights 2 6 - - 13606[31]
[IFCA] Iran related[32] - - - -
[IFSR] Iranian Financial 239 857 - 60 561
[IRAN] Iranian Transactions 19 416 175 - 560
[IRAN-HR] Iran related 54 37 - - 13553[33]
[IRAN-TRA] Iran related 16 45 - - 13628[34]
[IRAQ2] Iraq related 287 84 - - 13315 13350
[IRAQ3] Iraq related 102 48 - - 13438
[IRGC] Iranian Financial 112 120 - 38 561
[ISA] Iran Act 3 17 - - 13574
[JADE] Myannar Jade[35] - - - -
[LEBANON] Lebanon 13 - - - 549 13441
[LIBERIA] Former Liberian Regime of Charles Taylor 45 70 - - 593
[LIBYA2] Libya related 134 3 - - 570
[MAGNIT] Magnitsky Act[36] 54 - - -
[NPWMD] WMD related[37] 211 892 351 76 544
[NS-ISA] Iran related[38] - - - - 13574
[NS-PLC] Palestinian License[39] - - - - 594[40]
[SDGT] Terrorism related[41] 3015 1963 - 101 594
[SDNT] Narcotics related[42] 436 511 - - 536
[SDNTK] Narcotics related[43] 2102 1125 5 - 598
[SDT] Terrorism 63 143 - - 595
[SOMALIA] Somalia 199 20 - - 551
[SUDAN] Sudan related - 223 - - 538
[SOUTH SUDAN] South Sudan - - - - 558 13664
[SYRIA] Syria related 235 180 10 38 542 13399 13460
[TCO] Transnational Criminal Organizations 201 41 - - 590 13581[44]
[UKRAINE-EO13660] Ukraine related 193 31 - - 13660[45]
[UKRAINE-EO13661] Ukraine related 95 144 - - 13661[46]
[UKRAINE-EO13662] Ukraine related - - - - 13662[47]
[UKRAINE-EO13685] Ukraine related - 42 - - 13685[48]
[VENEZUELA] Venezuela related 7 - - - 13692[49]
[YEMEN] Yemen 23 - - - 552
[ZIMBABWE] Zimbabwe 121 119 - - 541[50] 13391 13469

Specially Designated Nationals List

OFAC publishes the Specially Designated Nationals (SDN) List, which lists people, organizations and vessels with whom United States citizens and permanent residents are prohibited from doing business.[7] This list differs from the list maintained pursuant to Section 314(a) of the USA PATRIOT Act.[51]

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 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.[52]

On September 23, 2011, the Ninth Circuit Court of Appeals upheld a lower court’s ruling that procedures used by Treasury to shut down the Al Haramain Islamic Foundation of Oregon in 2004 was unconstitutional. The court said the Fifth Amendment's guarantee of due process requires 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.[53]

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 organisations.[54] 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.[3]

See also

References

  1. ↑ Kasia Klimasinska, Dakin Campbell, Ian Katz. Banks Woo Treasury Sanctions Pros to Navigate Complex U.S. Rules, Bloomberg, August 13, 2014.
  2. ↑ Treasury Announces Additional Sanctions Against Iranian Engineering and Shipping Firms. Press release by OFAC Director Adam J. Szubin. March 28, 2012. Retrieved April 3, 2012.
  3. ↑ 3.0 3.1 3.2 Lua error in package.lua at line 80: module 'strict' not found.
  4. ↑ 4.0 4.1 Anna Yukhananov; Warren Strobel, After success on Iran, U.S. Treasury's sanctions team faces new challenges, Reuters, April 14, 2014.
  5. ↑ Rubenfeld, Samuel. OFAC Rises as Sanctions Become A Major Policy Tool, Wall Street Journal, February 5, 2014
  6. ↑ Treasury Reaches Largest Ever Sanctions-Related Settlement with BNP Paribas SA for $963 Million, Department of the Treasury, June 30, 2014
  7. ↑ 7.0 7.1 7.2 7.3 Lua error in package.lua at line 80: module 'strict' not found.
  8. ↑ 8.0 8.1 Lua error in package.lua at line 80: module 'strict' not found.
  9. ↑ For example Executive Order 12957, Executive Order 12938, etc.
  10. ↑ CounterPunch, How the Patriot Act Perpetuates Official Robberies
  11. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  12. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  13. ↑ 13.0 13.1 Lua error in package.lua at line 80: module 'strict' not found.
  14. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  15. ↑ IABA to File Amicus Brief in Appeal Before Second Circuit
  16. ↑ IABA Hires Lawyers to Request Further Guidance from OFAC
  17. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  18. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  19. ↑ "Western Balkans Stabilization"
  20. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  21. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  22. ↑ Blocked pending investigation
  23. ↑ "Foreign Narcotics Kingpin", blocked pending investigation
  24. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  25. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  26. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  27. ↑ 27.0 27.1 27.2 27.3 Lua error in package.lua at line 80: module 'strict' not found.
  28. ↑ "Non Proliferation sanctions evaders"
  29. ↑ "Anti-terrorism sanctions evaders"
  30. ↑ "Foreign Terrorist Organizations"
  31. ↑ 31.0 31.1 Lua error in package.lua at line 80: module 'strict' not found.
  32. ↑ Iran Freedom and Counter-Proliferation Act of 2012, PL 112-239
  33. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  34. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  35. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  36. ↑ Sergei Magnitsky Rule of Law Accountability Act of 2012, PL 112-208
  37. ↑ "Weapons of Mass Destruction Proliferators"
  38. ↑ Non-SDN Iranian Act
  39. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  40. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  41. ↑ "Global Terrorism"
  42. ↑ "Narcotics Trafficking"
  43. ↑ "Foreign Narcotics Kingpin"
  44. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  45. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  46. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  47. ↑ Lua error in package.lua at line 80: module 'strict' not found. Lua error in package.lua at line 80: module 'strict' not found. Lua error in package.lua at line 80: module 'strict' not found. Lua error in package.lua at line 80: module 'strict' not found. Lua error in package.lua at line 80: module 'strict' not found.
  48. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  49. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  50. ↑ also 70 FR 71201 and 73 FR 43841
  51. ↑ June 9, 2011OFAC SDN List vs. 314(a) List
  52. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  53. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  54. ↑ Lua error in package.lua at line 80: module 'strict' not found.

External links

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