Applying Expensive Lessons Learned: The Importance Of An Effective Sanctions Compliance Program

For international businesses, the costs of a weak sanctions compliance program can be steep, impacting both a company's reputation and its bottom line. This year alone, the Treasury Department's Office of Foreign Assets Control (OFAC) has imposed more than $10 million dollars in civil monetary penalties for violations of U.S. sanctions programs. The entities implicated represent a variety of sectors: consumer products, large e-commerce platforms, financial services, commodities exporters, telecommunications, shippers, and lobbyists. While these entities may be structured differently and operate on different scales, they share one common element: an inadequate compliance program.

U.S. authorities investigating sanctions breaches have highlighted this deficiency as an aggravating factor for monetary penalties. For example, in a July 2020 enforcement action targeting prohibited trading activity with North Korea, OFAC detailed how Essentra FZE, a cigarette manufacturer,