By Arcie Jordan, Sue Snyder and Salvador Castañeda

On Monday, November 9, 2009, the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") published new Enforcement Guidelines.  These Guidelines will be used by OFAC in determining appropriate enforcement for violations of U.S. economic sanctions programs.  Although these Guidelines do not impose new obligations on any person, they elaborate on OFAC's enforcement policy and procedures to enforce existing substantive rules.

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.  The sanctions target foreign countries and regimes, terrorists, international narcotics traffickers, and those organizations, entities, and individuals engaged in activities that are considered threats to the national security, foreign policy or the economy of the United States. Economic sanctions are designed to deprive the target of the use of its assets and to deny it access to the U.S. financial system and the benefits of trade, transactions, and services in the U.S. markets.

Among other things, the Guidelines provide greater certainty on the mitigation effect that a voluntary self disclosure of an apparent violation will have on applicable penalties.  Specifically, in certain situations, an apparent violation involving a voluntary self disclosure will result in a base penalty amount at least fifty percent less than the base penalty amount in similar cases that do not involve a voluntary self disclosure.  Similarly, in cases involving substantial cooperation with OFAC without voluntary self-disclosure, the Guidelines estimate that the base penalty amount generally will be reduced between twenty-five and forty percent.

This greater certainty provided by the Guidelines on the mitigation effect of a voluntary self disclosure may provide an incentive for persons who have or may have violated economic sanctions laws to voluntarily provide information to OFAC.  The added clarification is expected to increase cooperation and disclosure.

The economic sanctions enforced by OFAC target transactions with any of the countries, organizations, entities and individuals that are governed by OFAC.  The economic sanctions include civil and criminal penalties.  Therefore, before entering into any international business transaction, it is important to verify that the parties to the transaction are not targets of OFAC's economic sanctions programs.

Jackson Walker attorneys are experienced in guiding clients through the analysis required to determine whether to submit voluntary self disclosures under various U.S. laws, including those relating to economic sanctions programs. These attorneys have also represented clients submitting self disclosures under the Export Administration Regulations and the International Traffic in Arms Regulations. Jackson Walker attorneys are also experienced in advising clients considering entering new international markets, and regularly advise clients regarding developments in international trade law affecting U.S. businesses.  For more information on these issues, please contact Sue Snyder, Arcie Jordan or Salvador Castañeda, in JW's Austin office at 512-236-2000.