One of the least understood and most confusing concepts for those dealing with matter before the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) is that of facilitation. Facilitation is a term used throughout a number of OFAC administered sanctions program which has important consequences for those with indirect involvement in a transaction that may be impacted by U.S. sanctions.

Essentially, facilitation is used to refer to a prohibition which bars U.S. persons from facilitating the activities of a non-U.S. person that the U.S. person could not engage in directly. There are examples of these types of provisions throughout the various sanctions programs. For example:

1. Iran: Under the Iranian Transactions Regulations, the concept of facilitation is to “approve, finance, facilitate, or guarantee any transaction by a foreign person where the transaction by that foreign person would be prohibited . . . if performed by a [U.S.] person or within the United States.”

2. Burma:Under the Burmese Sanctions Regulations, the concept of facilitation involves “approving, financing, facilitating, or guaranteeing a transaction by a foreign person, if such transaction would be prohibited when performed by a U.S. person.”

3. Syria: The Syrian Sanctions Regulations prohibit “approval, financing, facilitation, or guarantee by a United States person” of a transaction by a foreign person where the “transaction by that foreign person would be prohibited. . .”

The core concept across all of these facilitation provisions is that U.S. persons cannot take some action which allows for transactions between two foreign persons to proceed if such transaction would be prohibited were a U.S. person directly involved. This is an important provision to understand as it prevents the evasion of sanctions through indirect actions. Indeed, in sanctions programs without an explicit facilitation subsection, the prohibition against facilitating otherwise prohibited activities is implicit in the evasion subsections. Examples of this type of language can be found in the Cuba and Sudan sanctions programs.

Facilitation is a very important concept to understand and to communicate to clients. Many clients seek to indirectly participate in prohibited transactions with the hope that they will not run afoul of U.S. sanctions. This is an approach that is incredibly dangerous due to the existence of facilitation prohibitions in the sanctions regulations. As is evident from the above, prohibitions against facilitation allow for OFAC to assert broad jurisdiction over transactions even where U.S. persons are not directly involved. As such, those navigating U.S. sanctions should be wary even of indirect involvement in prohibited transactions as the conduct might end up violating some facilitation provision.

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@ferrari-legal.com.