Donald Retreage in global business management, Global Strategy, Financial Accounting SENIOR VP & Cfo • Lightpath Technologies Inc. Jun 1, 2016 · 2 min read · +100

Doing Business Globally Part 2


In our previous article entitled Doing Business Globally P1 FCPA we discussed the importance of any business conducting business on an international level be knowledgeable about the U.S. FCPA (Foreign Corrupt Practices Act). In this article we will briefly be discussing OFAC.

The OFAC (Office of Foreign Assets Control ) of the Department of Treasury in the U.S. is in charge of running and implementing trade and economic sanctions which are based on the United States foreign policy as well as national security goals against those partaking in any activities in relation to the proliferation of weapons of mass destruction, foreign countries and regimens that are targeted, international drug dealers, terrorists and any other thing that may be a threat to the economy, foreign policy and of course national security of the U.S. 

Presidential national emergency powers are what control OFAC and any other authority which has been granted by specific legislation to enforce control over certain transactions as well as freeze assets all under the United States Jurisdiction. Generally these sanctions are based on mandates made by the United Nations and other international directives, there scope is multilateral and combine the close cooperation of other governments which are allies. 

All the way since before the War in 1912 the Treasury Department has had to deal with sanctions. Sanctions which were imposed against Great Britain for harassing American sailors were administered by the Secretary of the Treasury Gallatin. Congress approved a law during the Civil War in which they did not allow transactions to take place with the Confederacy and demanded that any goods that were involved in said transactions be given up, they instituted a licensing regime which abided by the regulations and rules instated by the Treasury. 

The OFAC is what succeeded the FFC (the Office of Foreign Funds Control) which was set in place at  the appearance of World War II after the Germans invaded Norway in 1940.  During the war the FCC program was administered by the Secretary of the Treasury and was at first instituted in order to prevent the Nazis from using the holdings of foreign exchange and securities of the countries they occupied, it was also in place in order to prevent the funds which belonged to the nationals of these countries to be distributed. 

At a later date these controls were extended to include the protection of assets of other countries which were invaded. Once the United States had become a formal part of World War II, they had a big part in the economic warfare that was launched against the powers of Axis by putting a block on enemy assets and not allowing financial transactions as well as foreign trade. 

Formally created in December of 1950, OFAC came about after the Chinese entered the Korean War and when President Truman  proclaimed a national emergency and all North Korean and Chinese assets were blocked and were subject to the jurisdiction of the United States. 

The OFAC is in charge of various sanctions programs. These sanction may be either selective or comprehensive and use the restrictions of trade and the blocking of assets to bring about national security goals and foreign policy. 

On top of the guidance they provide on specific sanction programs, the OFAC also imparts information regarding certain sanction relates subjects that include various programs or could have an effect on certain industries. Being familiar with the resources provided by OFAC is crucial to your business.

What about IBE? What is IBE (International Business Ethics)?  See DOING BUSINESS GLOBALLY P3



Donald Retreage Aug 9, 2016 · #4

Thank you @Joyce

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joyce albert Aug 8, 2016 · #3

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