Office of Foreign Assets Control
|Employees||Approximately 200 (2013)|
|Annual budget||$30.9 million (2013)|
|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 - such as Russia and Iran - as well as a variety of problematic organizations and individuals deemed to be a threat to U.S. national security.
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).
Often described as one of the most powerful yet unknown government agencies, 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.
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.
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.
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.
On October 15, 1962, by a Treasury Department order, the Division of Foreign Assets Control became the Office of Foreign Assets Control.
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.
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. 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.
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.
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. 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.
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. 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".
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. It has also hired lawyers to request further guidance from OFAC on import of goods from Iran.
Specially Designated Nationals List
OFAC is responsible for administering the Specially Designated Nationals (SDN) List. The list is a publication of OFAC which lists individuals and organizations with whom United States citizens and permanent residents are prohibited from doing business. This list differs from the one maintained pursuant to Section 314(a) of the USA PATRIOT Act.
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.
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.
Thousands of individuals and companies are currently designated on the SDN List, including the following:
- Abd al-Hadi al-Iraqi
- Abu Hafs al-Mauritani
- Abu Sayyaf
- Abu Zubaydah
- Aden-Abyan Islamic Army
- Al-Aqsa Foundation
- Al-Aqsa Martyrs' Brigades
- Al-Haramain Foundation
- Al-Itihaad al-Islamiya
- Al-Qaeda Organization in the Islamic Maghreb
- Al Taqwa Bank
- Al Wafa al Igatha al Islamia
- Amari Saifi
- Anwar al-Awlaki
- Armed Islamic Group (GIA)
- Army of the Guardians of the Islamic Revolution
- Asbat al-Ansar
- Ayman al-Zawahiri
- Ayman Joumaa
- Benoni Urey
- Party of Nepal (Maoist)
- Dawood Ibrahim
- Doku Umarov (Added 6-29-10)
- Egyptian Islamic Jihad
- Harakat ul-Mujahidin
- Holy Land Foundation
- Ibn Al-Shaykh al-Libi
- Ilyas Kashmiri (militant)
- International Islamic Relief Organization
- Islamic Army of Aden
- Islamic Movement of Uzbekistan
- Islamic Resistance Support Organization
- Jihad Al Binna
- Khaled Mashal
- Libyan Islamic Fighting Group
- Mahfouz Ould al-Walid
- Maktab al-Khidamat
- Mamoun Darkazanli
- Musa Abu Marzouk
- Mustafa Muhammad Ahmad
- Osbat al-Ansar
- Saderat Bank of Iran
- Salafist Group for Call and Combat
- Sayf al-Adl
- Tamils Rehabilitation Organisation
- Thirwat Shehata
- Union of Good
- Wafa Humanitarian Organization
- Yasin al-Qadi
- Kasia Klimasinska, Dakin Campbell, Ian Katz. Banks Woo Treasury Sanctions Pros to Navigate Complex U.S. Rules, Bloomberg, August 13, 2014.
- 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.
- Anna Yukhananov; Warren Strobel, After success on Iran, U.S. Treasury's sanctions team faces new challenges, Reuters, April 14, 2014.
- Rubenfeld, Samuel. OFAC Rises as Sanctions Become A Major Policy Tool, Wall Street Journal, February 5, 2014
- Treasury Reaches Largest Ever Sanctions-Related Settlement with BNP Paribas SA for $963 Million, Department of the Treasury, June 30, 2014
- "Frequently Asked Questions". Office of Foreign Assets Control. Retrieved 2007-09-17.
- "Records of the Office of Foreign Assets Control". The National Archives. Retrieved 2007-09-17.
- For example Executive Order 12957, Executive Order 12938, etc.
- CounterPunch, How the Patriot Act Perpetuates Official Robberies
- "Voices in the Wilderness Ordered to Pay $20K for Bringing Aid to Iraq". Democracy Now!. 2005-08-16. Retrieved 2011-06-08.
- "Timeline". Fined For Helping Iraqi Kids. Retrieved 2011-06-08.
- Liptak, Adam (2008-03-04). "A Wave of the Watch List, and Speech Disappears". The New York Times. Retrieved 23 August 2012.
80 of his Web sites stopped working, thanks to the United States government ... eNom told him it did so after a call from the Treasury Department
- "SDN BY PROGRAMS". treasury.gov. 2006. Archived from the original on 2006-09-24. Retrieved 23 August 2012.
GO CUBA PLUS (a.k.a. T&M INTERNATIONAL LTD.; a.k.a. TOUR & MARKETING INTERNATIONAL LTD. ...
- IABA to File Amicus Brief in Appeal Before Second Circuit
- IABA Hires Lawyers to Request Further Guidance from OFAC
- June 9, 2011OFAC SDN List vs. 314(a) List
- "KindHearts for Charitable Humanitarian Development, Inc. v. Geithner et al.". ACLU. November 22, 2011.
- "Al Haramain v. Department of Treasury" (PDF). U.S. Court of Appeals for the Ninth Circuit. Retrieved 27 September 2011.
- "2 Yemenis freed by US return home | World news | guardian.co.uk". London: Guardian. August 11, 2009. Retrieved April 30, 2010.
- "An Interview With President Ali Abdullah Saleh". The New York Times. June 28, 2008.
- Worth, Robert F. (January 28, 2008). "Yemen's Deals With Jihadists Unsettle the U.S". The New York Times.
- "U.S. freezes assets of suspected terror group". Usatoday.Com. May 29, 2003. Retrieved April 30, 2010.
- U.S. Department of the Treasury (2006). "U.S. Designates Al-Manar as a Specially Designated Global Terrorist Entity". U.S. Department of the Treasury.
- Jason Burke (July 11, 2004). "Cleric held shares in bank 'with terror links' | UK news | The Observer". London: Guardian. Retrieved April 30, 2010.
- Hansen, Andrew. "Al-Qaeda in the Islamic Maghreb (aka Salafist Group for Preaching and Combat)". The Washington Post. Retrieved April 30, 2010.
- "US-born radical Muslim cleric added to American terrorism blacklist". London: Telegraph. July 17, 2010. Retrieved 2010-07-17.
- "CNN.com – Transcripts". Edition.cnn.com. Retrieved April 30, 2010.
- "Specially Designated Nationals List (SDN) US Department of Treasury". US Department of Treasury.
- "Leading News Resource of Pakistan". Daily Times. October 19, 2003. Retrieved April 30, 2010.
- "Executive Order 13224". State.gov. Retrieved October 19, 2010.
- "A Freeze on Fairness". The Washington Post. November 21, 2007. Retrieved April 30, 2010.
- Cutting Off Terror’s Money Supply NYT August 17, 2007
- "Middle East Online". Middle East Online. July 29, 2004. Retrieved April 30, 2010.
- "International : Safety zone in LTTE-held area". Chennai, India: The Hindu. February 13, 2009. Retrieved April 30, 2010.
- Farah, Douglas (August 20, 2003). "U.S. Links Islamic Charities, Terrorist Funding". The Washington Post. Retrieved April 30, 2010.
- Office of Foreign Assets Control
- Specially Designated Nationals (SDN) List
- Office of Foreign Assets Control in the Federal Register
- List of sanctions programs including nations
- Search OFAC SDN