On April 20, OFAC issued COVID-related guidance indicating that it encourages those subject to its jurisdiction to contact the OFAC staff if they believe they will have difficulty meeting OFAC deadlines (whether reporting deadlines, responses to administrative subpoenas, or other matters). OFAC also encouraged electronic submission of any communications. In our experience, OFAC is still functioning at a relatively high level, remote operations notwithstanding, but the staff has also been flexible in responding to the challenges all institutions face. As OFAC’s guidance and our own experience underline, open communication with the staff is very important.
More interestingly, OFAC stated: “OFAC understands that the COVID-19 pandemic can cause technical and resource challenges for organization…. Accordingly, if a business facing technical and resource challenges caused by the COVID-19 pandemic chooses, as part of its risk-based approach to sanctions compliance, to account for such challenges by temporarily reallocating sanctions compliance resources consistent with that approach, OFAC will evaluate this as a factor in determining the appropriate administrative response to an apparent violation that occurs during this period.” This is a welcome indication that OFAC will be pragmatic in its enforcement expectations during the disruptions caused by COVID-19. However, while OFAC has clearly indicated that it will not be playing “gotcha” while normal operations are disrupted, we would caution that OFAC and other regulators are far less likely to be understanding of failure to act when potential problems are detected or suspected.
If you have any questions about sanctions compliance and enforcement during the COVID-19 pandemic or otherwise, the Cleary Gottlieb Economic Sanctions team, or any of your regular Firm contacts, would be pleased to assist.