Yes, it’s true. The United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) uses the internet. Before you unsubscribe because you think this either a) a stupid post; or b) I’ve lost my mind, let me explain. It is no secret that over the years Ferrari & Associates has represented parties seeking the rescission of their designations under OFAC-administered sanctions authorities. What may not be as well known is that often times we are challenging designations that rely substantially on open-source information. Of course there is almost always classified or otherwise privileged (i.e., law enforcement sensitive) information contained in the administrative records underlying those designations, however clients are often surprised at how many of OFAC’s findings used in support of OFAC’s sanctions determination derive from open-source information obtained through websites and media reports.

There are three primary sources of open-source information–all accessible online–that we see in these designation packets:

• Reporting from Business Intelligence Databases: Duns and Bradstreet, Opencorporates, and a host of other online databases publish information on corporate ownership, directorships, management, lines of business, locations of operation, etc. We often see information from these databases make its way into OFAC designation packets in support of sanctions targeting actions made by OFAC. This is particularly true in those instances in which a corporate entity is designated for ownership or control by a sanctioned target.

• Media and NGO Reports: As the use of sanctions has become more prevalent, so has the reporting on sanctioned persons, or those believed to be involved in sanctionable activities. If a company or person is named by a media article as being involved sanctionable activity, then there is a chance OFAC can see, and potentially rely, on that reporting; particularly, if OFAC has information corroborating that reporting. In addition, non-governmental organizations (“NGOs”) have become particularly savvy at identifying persons they believe to be involved in sanctionable conduct and publishing reports that identify that sanctionable conduct and, in some cases, specifically calling for sanctions to be imposed with respect to those persons. Indeed, some NGOs have gone as far as hiring former OFAC sanctions investigators and lawyers to prepare ready-to-go designation packets concerning certain persons they believe to be engaged in sanctionable conduct.

• Corporate Websites and Social Media Platforms: We often see information derived from a sanctioned persons’ own website or social media profiles make its way into their designation packet. Often times, the client–dumbfounded that something they published themselves was used to sanction them–remarks that the information on their website or social media was not accurate and only intended to give the impression that they were a bigger entity with more partners, affiliations, reach, etc. than they actually have. The problem is that OFAC doesn’t necessary know that a company’s purported links to another entity are only published for branding purposes and that such messaging does not evidence any actual connection between the main sanctions target and the party that has been designated. Since OFAC can, and will, rely on information contained on websites and social media platforms it’s imperative to ensure that information contained on such sites is 100% accurate. In other words, puffery on your website can lead, in some instances, to being sanctioned for ties to parties engaged in sanctionable conduct.

So what can be done to address these issues and potentially prevent an OFAC sanctions designation? If you’re a sophisticated commercial enterprise, the first step should be to incorporate, as a matter of routine, negative media searches as part of your compliance policies and procedures to ensure that your company is aware of any information being published about it. If, through those searches, the company discovers that inaccurate information is being published about it, then certain steps can be taken to address that information. These steps could include, for example, contacting business intelligence databases to update them on changes to corporate shareholdings, directors, lines of business, etc. or ensuring that there is no information on the company’s websites or social media platforms that is not 100% accurate. For example, we have seen time and time again corporate entities designated by OFAC for being affiliated with or linked to sanctioned entities, when in reality there is no shared ownership or links, but rather a corporate website merely highlighted a prior customer relationship and branded it as a “partnership” or “affiliate” relationship.

Dealing with negative reporting by media or NGOs, particularly that which alleges sanctionable conduct or expressly calls for sanctions to be imposed, is an entirely different issue. While cleaning up information on business intelligence platforms, websites, and social media platforms can be fairly straightforward, correcting information published in a news article or NGO report is more difficult. It is important to keep in mind that the authors of those articles or reports have already researched and prepared their stories–in other words, they’ve often made up their mind as to the facts, and any information presented by a biased party (i.e., you) is going to be viewed skeptically, or potentially spun to fit the author’s narrative. To address this, persons whom have had derogatory information concerning potentially sanctionable conduct written about them can take a few steps. First, they can and should contact the authors and/or publishers of that content and provide them with information demonstrating why the information published is inaccurate, outdated, or irrelevant. Second, they can issue press releases or public statements addressing the allegations and provide information that disproves the allegations or explains what changes have occurred or are being taken to address the allegations. Finally, although perhaps a risky endeavor, persons who have been targeted by media or NGOs with allegations of sanctionable conduct can go directly to OFAC and provide information and evidence demonstrating that the allegations are not true, that there has been a change in circumstances since the time of the conduct described by those allegations, or propose remedial measures to address those allegations.

In short, the dangers of being sanctioned or caught up in an OFAC targeting or enforcement investigation due to inaccurate or outdated information found on the internet is very real. Given the legal standards under which OFAC undertakes such actions–i.e., reasonable cause to believe; reliance on a seemingly limitless range of evidence; etc.–it doesn’t take much to end up on the list or to receive an OFAC administrative subpoena. Thus, persons named in open-source reporting, particularly that found on the internet, would be wise to keep an eye on what is being said about them and to follow the steps above to mitigate the possibility of being on the wrong end of any unwarranted OFAC action.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@falawpc.com.