Recently the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) announced the publication of A Framework for OFAC Compliance Commitments. The underlying intent of the framework is to help institutions better understand and comply with sanctions requirements.
According to OFAC, a successful OFAC compliance program should utilize a risk-based approach to sanctions compliance by developing, implementing and routinely updating a sanctions compliance program (SCP). Every risk-based SCP will vary depending on an institution’s size and sophistication, products and services, customers and counterparties, and geographic location. However, each program should incorporate at least five essential compliance components: 1) management commitment; 2) risk assessment; 3) internal controls; 4) testing and auditing; and 5) training. The framework further breaks down the specific features to each component in creating a strong OFAC compliance program.
As an example, the framework indicates that senior management’s commitment and support of the SCP is one of the most important and critical factors in determining its success. Support is key in ensuring the SCP obtains adequate resources and is fully-integrated into an institution’s daily operations. This helps legitimize the program, empower personnel and foster a culture of compliance.
continue reading »