Did you know that OFAC and the IRS have an Understanding?

In November, 2019 the IRS and the Office of Foreign Assets Control (OFAC) signed a Memorandum of Understanding (MOU).  The MOU outlines an understanding between the IRS and OFAC with respect to reviews conducted by the IRS for compliance with U.S. economic sanctions. 

The sharing of information under the MOU is intended to:

• Help the Office of Foreign Assets Control with administering U.S. economic sanctions
• Assist the IRS with exercising its delegated examination authority under Treasury Directive 15-43 (May 3, 2007)
• Promote the sharing of certain U.S. economic sanctions related information between the Office of Foreign Assets and the IRS
• Promote cooperative efforts between the Office of Foreign Assets Control and the IRS to heighten awareness of U.S. economic sanctions

Treasury Directive 15-43 states that:

“IRS authority to investigate and review includes, but is not limited to, the authority to compel the production of documents and information and otherwise to examine a person’s compliance with OFAC-administered economic sanctions”.

Under the MOU, IRS will provide OFAC with: 

• information concerning an apparent violation or compliance risk when the IRS discovers an apparent violation of U.S. economic sanctions or an apparent compliance risk with respect to such sanctions during the course of an economic sanctions’ compliance review.
• information that was obtained by the IRS under its delegated authority to conduct economic sanctions compliance reviews pursuant to Treasury Directive 15-43.

Under the MOU, OFAC will provide IRS with:

• information obtained during its economic sanctions’ compliance reviews of BSA-examined persons as mutually agreed between the points of contact.
• information about apparent violations of U.S. economic sanctions by BSA-examined persons as mutually agreed between the points of contact. 

OFAC will provide IRS with Advice, Assistance and Training

OFAC will provide IRS with an orientation regarding the U.S. economic sanctions for which the IRS will be conducting compliance examinations. OFAC will also provide other training or assistance to the IRS for the purpose of supporting the IRS’s compliance program with respect to U.S. economic sanctions.

OFAC applies to Everyone

All U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S incorporated entities and their foreign branches. In the current environment of increased regulation, transparency, reporting and heightened compliance standards, the US and its Government Agencies have an arsenal of tools for sharing information.