Inflation Has Driven the Fines for OFAC Violations Even Higher
Business and financial institutions that find themselves being investigated by the Office of Foreign Assets Control (OFAC) at the Department of the Treasury should strongly consider lawyering up. These investigations can be invasive and can quickly get costly if they get out in the public eye, as allegations that you conducted business with one of America’s enemies can seriously hurt your company’s reputation in the United States.
However, company stakeholders and decision-makers often struggle to get the right OFAC defense attorney for their needs. Here are five key points to keep in mind while looking for the best OFAC lawyer for your company.
1. Do Not Delay the Search Process
The worst thing that you can do is drag your feet and delay the search for an OFAC lawyer for your company. OFAC cases tend to move more quickly than others, and the early stages are among the most important.
On the one hand, your situation will not get better if you delay. It will only get worse. OFAC agents will continue to gather evidence that your company violated economic sanctions – and will do so without you having an OFAC defense lawyer to invoke your rights and advocate on your behalf.
On the other hand, acting quickly will give the OFAC sanctions attorney that you do choose to hire some extra time to prepare your defense. If you act quickly enough, the lawyer you hire can conduct an internal OFAC investigation to see what OFAC agents are likely to discover as they do theirs. This can inform your OFAC attorney, and you, of the risks that your company is facing and what would be an appropriate defense stance to assume in the case as it moves forward.
2. Look for Strong Negotiation Skills
The vast majority of OFAC cases are settled out of court and out of the public’s sight. After all, there is generally a partial alignment of interests between the company being targeted by the investigation and the law enforcement agency: Stopping the ongoing violation of economic sanctions. Once that is accomplished, OFAC’s interests in imposing penalties for the violation are largely limited to deterring others and punishing intentional or exceptionally negligent conduct.
As a result, much of the case is spent outside of the courtroom and before formal allegations are even filed. Cases often close through a negotiated settlement arrangement where offending companies pay a small fine, enhance their compliance mechanisms to prevent future violations, and the public never hears about it.
Good OFAC lawyers know that this is how cases frequently resolve themselves and will open a dialogue with regulators and law enforcement agents far more quickly than they may in other contexts. Furthermore, OFAC sanctions attorneys know how damaging the allegations could be if they were made public, adding to the pressure to negotiate a settlement with the federal agency.
3. Prior Representation in Your Industry is Important
Another key to finding the right OFAC sanctions defense lawyer for you is to look for prior representations of other companies that are similar to your own. The legal threats that companies can face can be extremely different based on the types of business that they transact. This is especially true for international economic sanctions law, and particularly true within sanctions law for financial institutions, which have different legal obligations to comply with.
Company stakeholders should aim for a lawyer who has prior experience representing a similar company to their own. This ensures that the lawyer will know what the company’s obligations are and what legal threats that it can face while interacting with OFAC to resolve the case.
4. Prioritize a Record of Successes in Similar Cases
Even company decision-makers who have never had to hire outside counsel to protect their firm know that one of the best ways to gauge the effectiveness of a lawyer or law firm is to look at what that attorney or firm has done for similar clients in the past. Many law firms know this and tout their prior success stories and the testimonials that their former clients have left them.
When it comes to OFAC defense, though, things get nuanced. A “successful outcome” is going to depend on numerous factors, including the strength of the case amassed by federal investigators, the company’s interests, and the other circumstances surrounding the case. Many of these details are not publicly available. It can even be difficult to determine which companies an OFAC defense lawyer has represented in the past because those companies will have insisted that their name not be used to avoid the stain on their reputation.
Therefore, while is it absolutely an important key to picking the best OFAC sanctions defense lawyer for your needs, a prior record of OFAC successes is far more limited than many corporate decision-makers may realize.
5. Federal Experience is Key
Finally, a good OFAC lawyer will have experience handling cases in a federal courtroom and against federal law enforcement agencies.
These agencies are far more formidable than the local district attorney’s office or even the state attorney general’s office, which both pursue cases in state court. OFAC has access to all of the resources of the federal government as it enforces the laws it is tasked with overseeing. For attorneys that do not focus their attention on federal court cases, the thoroughness of the case that OFAC is likely to present can be overwhelming and will punish any mistake that they make.
According to Dr. Nick Oberheiden, the founding partner of the national law firm Oberheiden P.C., which provides OFAC defense services to companies across the country, “There are several important factors that company stakeholders should keep in mind when tasked with hiring outside counsel to challenge an OFAC investigation. This is a pivotal moment in the company’s history, as a public finding that it violated economic sanctions can be disastrous. However, getting good, effective OFAC defense counsel quickly is far more valuable than getting the perfect one halfway through the case. Time is of the essence.”
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.