US Office of Foreign Assets Control (OFAC)

Understanding the US Office of Foreign Assets Control (OFAC)

The US Office of Foreign Assets Control (OFAC) is a division of the US Treasury Department that focuses on financial intelligence and enforcement. Its main responsibility is to compile and publish the Specially Designated Nationals and Blocked Persons List (SDN), which identifies individuals and companies associated with targeted countries. The OFAC is in charge of implementing economic and trade sanctions against entities on this list.

The targeted individuals and countries include various groups, such as terrorists, narcotics traffickers, and those involved in foreign aggression. Sanctions can also be imposed for activities like cyber-terrorism. These individuals and entities have their assets frozen, and US citizens are prohibited from engaging in any transactions with them. Sanctions are approved either by Congress or by the president during a state of emergency.

The establishment of OFAC dates back to 1950 when China’s involvement in the Korean War led then-US president Harry Truman to declare a national emergency and freeze Chinese and Korean assets under US jurisdiction.

In addition to its own mandates, OFAC can also impose sanctions based on directives from the United Nations. As of 2021, some countries on the SDN list include the Balkans, Zimbabwe, and Russia due to the latter’s occupation of Crimea in 2014.

Since 2020, OFAC has increased its scrutiny of cryptocurrency activities. It has investigated transactions conducted by leading digital asset exchange Coinbase, imposed fines on companies like BitPay for violating sanctions, and issued warnings to firms assisting ransomware victims in paying their attackers, emphasizing the potential penalties they may face.