A recent OFAC enforcement action against MidFirst Bank highlights the five essential components of an effective sanctions compliance program that will serve to mitigate exposure in the event of a violation:
- Senior management commitment to developing a culture of compliance
- Thorough and routine risk assessment
- Defined internal controls and recordkeeping
- Comprehensive testing and auditing of transactions
- Periodic training for company personnel
On July 21, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a Finding of Violation (“FOV”) to MidFirst Bank for violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations. OFAC’s decision to issue an FOV to MidFirst, in place of steep civil penalties that are typical of OFAC enforcement, was based on a variety of mitigating factors that OFAC has vowed to consider in imposing penalties for U.S. sanctions violations. Among these factors, a risk-based sanctions compliance program consisting of both preventative as well as remedial measures in the event of a violation is imperative for companies engaged in international business to avoid large fines.