The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) created a sanctions compliance framework for foreign or domestic companies doing business with U.S. organizations. OFAC strongly encourages organizations to develop sanctions compliance programs to prevent common violations. If your company needs to create a sanctions compliance program, here are the five essential components, according to OFAC.

Management commitment

The management team should review and approve a new sanctions compliance program and delegate someone (or several people) to deploy the policies and procedures. Management will also need to allocate the essential resources and create a culture of compliance among team members, to ensure people feel comfortable reporting misconduct when they observe it.

OFAC risk assessment

In conducting an OFAC risk assessment, your organization should thoroughly review its processes and identify any areas where you may directly or indirectly violate sanctions. Companies should conduct a risk assessment at various points throughout customer relationships or transactions and consistently update the assessments to prevent violations. Visit this website if you need to know about OFAC risk assessment.

Internal controls

Developing internal controls are important because they outline the expectations, procedures, and processes regarding compliance. For any business, internal controls should include:

• Policies and procedures that outline the sanctions compliance program
• Controls that empower the organization to identify and report financial activities that are prohibited
• Internal and external audits to reinforce policies and procedures
• Accurate and consistent records
• Clearly communicated policies to staff members operating in high-risk areas and third-party organizations operating on the company’s behalf
• Staff to integrate policies and procedures into daily operations
• Technology solutions that are tailored to the company’s risk profile and compliance needs

Regular testing and auditing

By regularly testing and auditing, your company can accurately verify how your programs are performing. As a result, you’ll also be better able to determine when processes should be updated or changed to address any changes in your most recent OFAC risk assessment.

Training

To prevent future violations, you’ll also need to ensure annual training is a part of your sanctions compliance program. Although you can provide training more frequently, once a year is the minimum you should aim for. Within the training, you should provide job-specific knowledge, clearly communicate your compliance program responsibilities, and make sure employees know they are responsible for completing the training regularly when it’s assigned.

When employed correctly, these five components of a sanctions compliance program will help ensure that your company mitigates liability related to illegal financial activities with entities and individuals that you do business with.

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