OFAC operates under a strict liability standard for civil penalties, meaning intent is not required to establish a violation. Even if you had no knowledge that a party was sanctioned or that a transaction was prohibited, you can still face civil penalties if a violation occurred. However, intent is one of the factors OFAC considers when determining the appropriate penalty amount. Their enforcement guidelines distinguish between egregious cases (willful or reckless violations) and non-egregious cases (due to negligence or compliance system failures despite good faith efforts). Non-egregious violations typically result in lower penalties, especially if you had a compliance program in place, even if it was inadequate. The presence of compliance procedures, even imperfect ones, demonstrates you were trying to comply. I studied OFAC’s penalty determinations at https://ofacblockedfundslawyers.com/ and found significant variations based on intent. A company with no compliance program committing the same violation as a company with robust procedures typically faces much higher penalties. Mitigating factors include: voluntary disclosure, cooperation with investigation, and remedial actions taken. Criminal prosecution under OFAC authorities does require willfulness, so the distinction between civil and criminal matters. If you discover an unknowing violation, how you handle it becomes critical – immediate disclosure and remediation works in your favor.
