OFAC Takes Aggressive Enforcement Action in Connection With M&A Transactions and Spells Out Compliance Expectations

The Office of Foreign Assets Control of the U.S. Treasury Department recently issued a series of instructive press releases regarding enforcement actions taken against several companies.

The decision to publicize these enforcement actions could signal a more activist and expansionist approach to sanctions enforcement matters and may evidence a broadening of OFAC’s enforcement priorities as the long run of enforcement against financial institutions begins to wind down. The actions demonstrate a focus on acquisition due diligence and conduct by overseas entities, and in particular on aggressive action against U.S. companies who fail to terminate sanctioned business by their newly acquired overseas subsidiaries; indeed, in a number of these cases OFAC took enforcement action despite the fact that the U.S. acquiror explicitly directed the termination of the sanctioned business, was deceived by officials of the acquired entity, and voluntarily self-reported the violation after discovering it. OFAC has also begun to spell out, in enforcement actions, the elements of sanctions compliance programs it imposes on violators (and, presumably, would consider a benchmark for other companies).

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