Office of Foreign Assets Control (OFAC)
What OFAC is, how it administers US sanctions, and what OFAC compliance means for KYB programs.
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The Office of Foreign Assets Control (OFAC) is a US Treasury department that administers and enforces economic and trade sanctions based on US foreign policy and national security goals.
OFAC’s Role
Sanctions Administration
- Maintains the SDN List of sanctioned parties
- Administers country-based programs (Cuba, Iran, North Korea, Russia)
- Administers sector-specific sanctions
Enforcement
- Investigates potential violations
- Issues civil penalties (can reach millions of dollars per violation)
- Provides guidance on compliance programs
Licensing
- Issues licenses for authorized transactions with sanctioned parties
- Provides general licenses for categories of permitted activity
OFAC and KYB
For KYB compliance, OFAC screening is mandatory:
| Who to Screen | Why |
|---|---|
| Business entity | May be directly sanctioned |
| Beneficial owners | Ownership by sanctioned persons |
| Directors/officers | Control by sanctioned persons |
| Connected parties | For certain programs |
Strict Liability
OFAC operates on a strict liability basis—penalties apply even for inadvertent violations. This makes robust sanctions screening essential.
OFAC Resources: https://ofac.treasury.gov
Related: SDN | Sanctions Screening | AML