Bookmark and Share
Overview:
OFAC administers and enforces economic sanctions imposed on hostile states, nationals and organizations as determined by U.S. foreign policy and national security. It publishes and updates the Specially Designated Nationals List (SDN List) a comprehensive list of people, organizations, and nations with whom it is prohibited for U.S. Citizens, residents, and organizations to engage in business. The agency currently maintains a comprehensive ban requiring Americans to apply to OFAC for permission to interact commercially in any aspect with Burma (Myanmar), Iran, Sudan and Cuba. It also maintains a non-comprehensive ban in North Korea, Colombia, and Iraq among other places, in where only certain industries and specific destinations are sanctioned. The difference between the two types of bans is practically negligible considering that the agency reserves the right to grant trading rights to any given application. Any activity conducted with any banned destination is tightly regulated and carefully monitored; even though American nationals may send remittances to Cuba, those remittances allowed to be carried by travelers was reduced from $3000 to $300 in 2004 (See controversies). OFAC derives its authority primarily from the International Emergency Economic Powers Act (IEEPA) (PDF), and the Trading with the Enemy Act (TWEA) (PDF). It is an agency within the Under Secretary of the Treasury for Terrorism and Financial Intelligence (TFI), a branch of the Treasury Department
 
more
History:

 

 

 

 

 

 

OFAC can trace its history back to a number of precursory institutions, and has its true beginnings in the economic sanctions imposed by the American government on the British during the war of 1812. Its first modern precursor, the Office of Foreign Funds Control (FFC) was established in 1940 when the Nazi regime invaded Norway. The FFC was administered by the secretary of the treasury, and was designed to prevent forced remittances to Nazi-occupied countries. The Office protected foreigners’ assets in the U.S. and also impeded the Nazis’ ability to fund their war machine. OFAC was officially formed in 1950, when China entered the Korean War on the side of North Korea and President Truman declared a national emergency, freezing all Chinese and North Korean assets.

 

more
What it Does:

 

 

 

 

 

 

OFAC targets select foreign countries, terrorist organizations, weapons proliferators, and narcotics traffickers, both preventing transactions and freezing assets. Although there is no set timetable for updates to the SDN list, OFAC usually releases revisions a few times per month: in 2007 there were 43 updates (PDF). The Bureau of Industry and Security (BIS) in the Department of commerce publishes similar lists, the Denied Persons List and the Entity list. Respectively, these lists deny export rights to certain U.S. individuals and organizations, and blocks exports destined to intermediaries capable of diverting U.S. material and technology to foreign hostiles. Despite many complaints about the increased cost and difficulty of complying with multiple lists, OFAC and BIS have refrained from making a comprehensive master list, citing their differing goals as a barrier to compilation.
 
In 2007, OFAC issued its first qualitative report (PDF) examining the effectiveness of its sanctions on Colombian drug cartels. The report concludes that by identifying and freezing the sham organizations used to launder drug proceeds, OFAC has successfully neutralized a significant portion of drug cartel activity. Furthermore, OFAC sanctions have motivated Colombian banks to follow suit and close their doors to cartels, impeding their ability to finance their operations. The report includes a number of anecdotal quotes from Cartel figures, including one from Humberto Rodriguez Mondragon, the son of a leading Cartel family: “The U.S. pressure is reaching unexpected extremes. The largest international suppliers refuse to deal with us. The banks have closed down their accounts. It is impossible for us to pay our obligations”.
 
In November of 2007, OFAC placed the Tamils Rehabilitation Organization on its specially designated nationals list, for allegedly being a front for the Liberation Tigers of Tamil Eelam, a rebel group in Sri Lanka. The non-profit organization sends its donations to a central office in Sri Lanka, and claims to use the donations to fund humanitarian work in areas controlled by the Tigers. The organization has faced scrutiny international scrutiny previous to its designation by OFAC, who claim that the Tigers oversee the actions of the TRO, and funneled much of the funds raised for Tsunami disaster relief in 2004 towards military operations.

 

U.S.Treasury says Toronto non-profit funds Tigers: Assets Frozen (by Stewart Bell, National Post)

 

more
Controversies:

 

 

 

 

 

 

In November of 2007, the Government Accountability Office (GAO) performed an audit of the money, time, and effort dedicated by various agencies towards enforcing embargoes against Cuba. In the report (PDF), GAO finds that since 2001 OFAC has begun more investigations and imposed more penalties related to embargo violations, such as buying Cuban cigars off the internet, than other sanctions such as those against Sudan or Iran. From 2000 to 2006, 61% of OFAC’s cases have been Cuban embargo-related. Furthermore, the majority of these cases are against individuals dealing in small quantities of exported goods. OFAC’s index of civil penalties and enforcement information verifies these arguments. The report concludes that the focus on Cuba may distract the agency from its other goals of disrupting international drug trafficking and terrorism. In response to this report, the State department issued a two part defense. First, it argued that in accordance with the recommendations of the interagency Commission for Assistance to a Free Cuba (CAFC), taxes and fees on travel dollars and Cuban imports help fund the Castro autocracy and hinder the development of a Cuban democratic movement. They also state that cases involving Cuban embargoes have dropped from 70% of the agency’s workload from 2000 to 2005 to only 29% in 2007. 

Papers Detail Complaints of Links to Treasury List

(by Neil MacFarquhar, New York Times)

 

more
Debate:

 

 

 

 

 

 

A report from the Associated Press, discussed here, notes that fines for dealing with various state sponsors of terrorism dropped from $50,000 on average for the five years preceding 9/11 to $18,700 afterwards. Adam Pener, chief operating officer of Conflict Securities Advisories Group, responded that this is a sign of OFAC doing its job. He argues that lower fines are an indication that companies are less willing to engage in financial interactions with sanctioned countries.
 
A report (PDF) from the Congressional Research Committee discusses the history of the embargo on Cuba, and delivers both sides of the argument for loosening and tightening restrictions on Cuba.

 

Average fine for dealing with terrorist nations plunged after Sept. 11 (by Matt Kelley, Associated Press)

 

more
Former Directors:

 

 

 

 

 

 

Robert Werner, the director of OFAC between October 2004 and March 2006, left to direct FinCEN from March 2006 until November of 2006, when he left to accept a position at Merrill Lynch as a managing director and head of its monetary and financial group and its bank compliance group.

 

more

Comments

Paula block 4 years ago
I need to talk to a Terry Bradson (sp?). She contacted me but I need a phone number.

Leave a comment

Founded: 1950
Annual Budget: $23 million
Employees:
Office of Foreign Assets Control
Szubin, Adam
Previous Director
Adam J. Szubin spent both his undergraduate and graduate years at Harvard University, graduating magna cum laude from the college and cum laude from the law school. After his Fulbright scholarship, he returned to the states and clerked for Judge Ronal Gilman on the U.S. Court of Appeals for the Sixth Circuit. Moving into the Justice department, he served as a trial attorney for the Terrorism litigation Task force in the civil division of the Justice department before he became Counsel to the Deputy Attorney General and led the department’s efforts to combat terrorist financing. After his tenure at the Department of Justice, he worked as Senior Advisor to the Under Secretary for Terrorism and Financial Intelligence, and chaired the Money Laundering Threat Assessment Working Group. On August 1 2006, U.S. Treasury Secretary Henry Paulson named Adam J. Szubin the Director of OFAC. In 2002, Szubin founded D.C. Minyan, an Orthodox Jewish congregation dedicated to equal participation for women.
 
more
Bookmark and Share
Overview:
OFAC administers and enforces economic sanctions imposed on hostile states, nationals and organizations as determined by U.S. foreign policy and national security. It publishes and updates the Specially Designated Nationals List (SDN List) a comprehensive list of people, organizations, and nations with whom it is prohibited for U.S. Citizens, residents, and organizations to engage in business. The agency currently maintains a comprehensive ban requiring Americans to apply to OFAC for permission to interact commercially in any aspect with Burma (Myanmar), Iran, Sudan and Cuba. It also maintains a non-comprehensive ban in North Korea, Colombia, and Iraq among other places, in where only certain industries and specific destinations are sanctioned. The difference between the two types of bans is practically negligible considering that the agency reserves the right to grant trading rights to any given application. Any activity conducted with any banned destination is tightly regulated and carefully monitored; even though American nationals may send remittances to Cuba, those remittances allowed to be carried by travelers was reduced from $3000 to $300 in 2004 (See controversies). OFAC derives its authority primarily from the International Emergency Economic Powers Act (IEEPA) (PDF), and the Trading with the Enemy Act (TWEA) (PDF). It is an agency within the Under Secretary of the Treasury for Terrorism and Financial Intelligence (TFI), a branch of the Treasury Department
 
more
History:

 

 

 

 

 

 

OFAC can trace its history back to a number of precursory institutions, and has its true beginnings in the economic sanctions imposed by the American government on the British during the war of 1812. Its first modern precursor, the Office of Foreign Funds Control (FFC) was established in 1940 when the Nazi regime invaded Norway. The FFC was administered by the secretary of the treasury, and was designed to prevent forced remittances to Nazi-occupied countries. The Office protected foreigners’ assets in the U.S. and also impeded the Nazis’ ability to fund their war machine. OFAC was officially formed in 1950, when China entered the Korean War on the side of North Korea and President Truman declared a national emergency, freezing all Chinese and North Korean assets.

 

more
What it Does:

 

 

 

 

 

 

OFAC targets select foreign countries, terrorist organizations, weapons proliferators, and narcotics traffickers, both preventing transactions and freezing assets. Although there is no set timetable for updates to the SDN list, OFAC usually releases revisions a few times per month: in 2007 there were 43 updates (PDF). The Bureau of Industry and Security (BIS) in the Department of commerce publishes similar lists, the Denied Persons List and the Entity list. Respectively, these lists deny export rights to certain U.S. individuals and organizations, and blocks exports destined to intermediaries capable of diverting U.S. material and technology to foreign hostiles. Despite many complaints about the increased cost and difficulty of complying with multiple lists, OFAC and BIS have refrained from making a comprehensive master list, citing their differing goals as a barrier to compilation.
 
In 2007, OFAC issued its first qualitative report (PDF) examining the effectiveness of its sanctions on Colombian drug cartels. The report concludes that by identifying and freezing the sham organizations used to launder drug proceeds, OFAC has successfully neutralized a significant portion of drug cartel activity. Furthermore, OFAC sanctions have motivated Colombian banks to follow suit and close their doors to cartels, impeding their ability to finance their operations. The report includes a number of anecdotal quotes from Cartel figures, including one from Humberto Rodriguez Mondragon, the son of a leading Cartel family: “The U.S. pressure is reaching unexpected extremes. The largest international suppliers refuse to deal with us. The banks have closed down their accounts. It is impossible for us to pay our obligations”.
 
In November of 2007, OFAC placed the Tamils Rehabilitation Organization on its specially designated nationals list, for allegedly being a front for the Liberation Tigers of Tamil Eelam, a rebel group in Sri Lanka. The non-profit organization sends its donations to a central office in Sri Lanka, and claims to use the donations to fund humanitarian work in areas controlled by the Tigers. The organization has faced scrutiny international scrutiny previous to its designation by OFAC, who claim that the Tigers oversee the actions of the TRO, and funneled much of the funds raised for Tsunami disaster relief in 2004 towards military operations.

 

U.S.Treasury says Toronto non-profit funds Tigers: Assets Frozen (by Stewart Bell, National Post)

 

more
Controversies:

 

 

 

 

 

 

In November of 2007, the Government Accountability Office (GAO) performed an audit of the money, time, and effort dedicated by various agencies towards enforcing embargoes against Cuba. In the report (PDF), GAO finds that since 2001 OFAC has begun more investigations and imposed more penalties related to embargo violations, such as buying Cuban cigars off the internet, than other sanctions such as those against Sudan or Iran. From 2000 to 2006, 61% of OFAC’s cases have been Cuban embargo-related. Furthermore, the majority of these cases are against individuals dealing in small quantities of exported goods. OFAC’s index of civil penalties and enforcement information verifies these arguments. The report concludes that the focus on Cuba may distract the agency from its other goals of disrupting international drug trafficking and terrorism. In response to this report, the State department issued a two part defense. First, it argued that in accordance with the recommendations of the interagency Commission for Assistance to a Free Cuba (CAFC), taxes and fees on travel dollars and Cuban imports help fund the Castro autocracy and hinder the development of a Cuban democratic movement. They also state that cases involving Cuban embargoes have dropped from 70% of the agency’s workload from 2000 to 2005 to only 29% in 2007. 

Papers Detail Complaints of Links to Treasury List

(by Neil MacFarquhar, New York Times)

 

more
Debate:

 

 

 

 

 

 

A report from the Associated Press, discussed here, notes that fines for dealing with various state sponsors of terrorism dropped from $50,000 on average for the five years preceding 9/11 to $18,700 afterwards. Adam Pener, chief operating officer of Conflict Securities Advisories Group, responded that this is a sign of OFAC doing its job. He argues that lower fines are an indication that companies are less willing to engage in financial interactions with sanctioned countries.
 
A report (PDF) from the Congressional Research Committee discusses the history of the embargo on Cuba, and delivers both sides of the argument for loosening and tightening restrictions on Cuba.

 

Average fine for dealing with terrorist nations plunged after Sept. 11 (by Matt Kelley, Associated Press)

 

more
Former Directors:

 

 

 

 

 

 

Robert Werner, the director of OFAC between October 2004 and March 2006, left to direct FinCEN from March 2006 until November of 2006, when he left to accept a position at Merrill Lynch as a managing director and head of its monetary and financial group and its bank compliance group.

 

more

Comments

Paula block 4 years ago
I need to talk to a Terry Bradson (sp?). She contacted me but I need a phone number.

Leave a comment

Founded: 1950
Annual Budget: $23 million
Employees:
Office of Foreign Assets Control
Szubin, Adam
Previous Director
Adam J. Szubin spent both his undergraduate and graduate years at Harvard University, graduating magna cum laude from the college and cum laude from the law school. After his Fulbright scholarship, he returned to the states and clerked for Judge Ronal Gilman on the U.S. Court of Appeals for the Sixth Circuit. Moving into the Justice department, he served as a trial attorney for the Terrorism litigation Task force in the civil division of the Justice department before he became Counsel to the Deputy Attorney General and led the department’s efforts to combat terrorist financing. After his tenure at the Department of Justice, he worked as Senior Advisor to the Under Secretary for Terrorism and Financial Intelligence, and chaired the Money Laundering Threat Assessment Working Group. On August 1 2006, U.S. Treasury Secretary Henry Paulson named Adam J. Szubin the Director of OFAC. In 2002, Szubin founded D.C. Minyan, an Orthodox Jewish congregation dedicated to equal participation for women.
 
more