There is one word that makes practitioners before the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) cringe in fear: facilitation. Facilitation is a concept that is codified throughout the various OFAC regulations that in essence states no U.S. person can carry out any act which allows for two foreign persons to engage in a transaction which would be prohibited by the sanctions were the U.S. persons directly involved. Obviously this is an unwieldy definition and one that leaves quite a bit of room for ambiguity and confusion. I have always found that facilitation was best explained by example, so here are a few transaction specific examples that would invoke facilitation if a sanctioned party or country were involved:

1. Approving of prohibited activity: A U.S. person cannot advise on the structuring of any transaction involving a sanctioned country or person. That said, the provision of services which entail advising what is legal under U.S. law is allowed.

2. No working for a foreign subsidiary: U.S. persons cannot work for a foreign subsidiary which provides services to a sanctioned party or nation and be involved in the services provided to those sanctioned parties. This especially becomes problematic when dealing with U.S. persons who are officers or managers of that foreign subsidiary and may be liable for all transactions of the subsidiary.

3. Directing Business Opportunities: U.S. persons cannot carry out any activities which may lead to trade between two foreign persons if one of those persons is targeted for sanctions or is in a sanctioned country. In essence, making a referral to a person outside of the United States to engage in business with a sanctioned person or vice versa constitutes facilitation and is prohibited.

As with everything when dealing with OFAC it all comes down to the facts of each individual case. Due to the ambiguity of the regulations, the legality of every transaction which in someway, shape, or form involves a sanctioned party or country needs to be considered on a case by case basis.

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.