The Office of Foreign Assets Control (OFAC) regulations mandate compliance from a broad range of entities and individuals. U.S. citizens and permanent residents, wherever located, are obligated to adhere to these sanctions. Businesses formed under U.S. law or operating within the United States, including their foreign branches, must also comply. Foreign entities owned or controlled by U.S. persons fall under the jurisdiction of OFAC, as do individuals and entities physically located in the United States, even if they are not U.S. citizens. Consider a U.S. bank processing a transaction involving a sanctioned individual: even if the transaction originates outside the U.S., the bank is still required to block or reject it.
Adherence to these regulations plays a crucial role in maintaining national security and furthering U.S. foreign policy objectives by limiting the financial capabilities of sanctioned individuals, entities, and regimes. These sanctions programs address a range of concerns, from counterterrorism and counternarcotics efforts to combating the proliferation of weapons of mass destruction. Historically, sanctions programs have evolved from targeting specific countries during wartime to becoming a more nuanced tool for addressing a wider spectrum of international issues. The modern framework traces its roots to the Trading with the Enemy Act of 1917, which provided a legal basis for restricting trade with hostile nations.
