Looking for an OFAC Sanctions Defense Lawyer for Your Financial Institution? 5 Keys for Finding the Best One - Federal Lawyer
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Looking for an OFAC Sanctions Defense Lawyer for Your Financial Institution? 5 Keys for Finding the Best One

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Looking for an OFAC Sanctions Defense Lawyer for Your Financial Institution? 5 Keys for Finding the Best One

Financial institutions are among the most exposed types of businesses, at least when it comes to legal liability under the international economic sanctions that are enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC). Finding a good OFAC defense lawyer to control the fallout from an OFAC investigation and represent the institution in federal court is critical.

Here are five tips that Dr. Nick Oberheiden, OFAC defense lawyer and founding partner of the national law firm Oberheiden P.C., recommends considering.

1. Negotiation Skills are Paramount

OFAC cases are unique in that the agency investigating them and enforcing the law are mainly focused on ending the sanctions violation. Punishing the violator is also important, yes, but only as it serves to either deter other potential violators or to serve as a punitive action against intentional or grossly negligent conduct. Enforcing American economic sanctions against foreign parties puts OFAC in a complicated stance – they rely heavily on voluntary disclosures, so coming down too hard on negligent violations would end up backfiring as financial institutions stop self-reporting them.

This complicated goal of OFAC is important when it comes to hiring an OFAC defense lawyer. Much of the defense process is spent interacting with the agency outside of the courtroom, often well before any formal notification of the enforcement action is announced. This process is very negotiation-heavy. OFAC agents want to plug up the violation while also imposing some sort of penalty against your financial institution for its role in letting it happen. You also want to plug up the violation while minimizing the repercussions. The partially aligned interests make for a strange, semi-confrontational posturing where negotiation skills can make a huge difference in the outcome.

2. Federal Experience is Also Essential

Most defense lawyers, including numerous OFAC defense attorneys, spend most of their time in state court. Finding one that focuses their practice in federal court is a key to success in OFAC defense.

State court cases are pursued by small law enforcement agencies like the local district attorney’s office. At worst, the state’s attorney general’s office is behind the case.

In federal court, you will be facing OFAC, which can tap into the vast resources that the federal government has at its disposal. The mistakes that an attorney can “get away with” in federal court are as close to zero as possible. Odds are nearly certain that federal agents will have the information necessary to leverage weak points in your case or any oversights there are in your defense strategies, to your detriment.

State court attorneys rarely appreciate this until it is too late. By then, of course, it is too late: Your defense is slipshod or full of holes for OFAC to use against your financial institution.

3. Experience Representing Financial Institutions is Important, Especially in OFAC Cases

Financial institutions are frequent targets in OFAC enforcement because they act as a conduit through which sanctioned parties and individuals move their money. These institutions have additional legal obligations under economic sanctions law because of their ability to close or freeze accounts before they can be withdrawn, depriving the target of the sanctions of their assets held at the institution.

Whether you are a financial institution under OFAC law is not always clear. 31 C.F.R. § 561.309 has a non-exhaustive list of them that includes the obvious examples, like banks and credit unions, but also less obvious businesses like insurance companies and securities broker-dealers.

Having an OFAC defense lawyer who understands whether your company is actually a “financial institution” or not is essential. If you are one, there are extra obligations that you need to uphold. Failing to comply with those obligations can expose your company to scrutiny and legal liability.

4. A Track Record of Successes in OFAC Cases Does Not Lie

It goes without saying that one of the most important keys to choosing the best OFAC defense lawyer for your needs is whether the attorney has a track record of success in protecting financial institutions from OFAC liability.

However, each case is different. When looking through a potential OFAC defense lawyer’s prior representations, you should also look for similar factual circumstances in the case as well as similar interests by the financial institution. These characteristics can drastically alter what constitutes “success” for the given situation. They can also mean the difference between a good and a bad outcome.

5. Hire One as Soon as Possible

One of the biggest keys to hiring the best OFAC sanctions lawyer for your needs, though, is to get one on board as soon as possible. Ideally, there will be one already in your ranks for ongoing compliance requirements. However, if those compliance protocols failed and you learn that OFAC is considering an investigation into your company, it is essential to get an OFAC sanctions defense lawyer as soon as you can. The early stages of an OFAC investigation are among the most important. Giving your OFAC defense attorney the time they need to get ahead of the investigation and conduct an internal audit to discover what the investigation is likely to find can put your financial institution in the best position that is possible at this point in the case.

Conclusion

Learning that your financial institution is under scrutiny by OFAC for allegedly violating American economic sanctions is a crucial moment in your business’ life. If convicted for a criminal offense of helping someone evade sanctions, the potential penalties include millions of dollars in fines and decades behind bars. Even civil cases carry huge financial penalties, while the mere allegation of a sanctions violation, if it reaches the public, can undermine trust in your financial institution – a trust that it runs on.

Dr. Nick Oberheiden, an OFAC defense lawyer at Oberheiden P.C., often warns financial institutions that “these cases are unique in that the reputational harm can often exceed the legal repercussions. Getting a good OFAC defense lawyer, and getting one quickly, can make a huge difference in the outcome of your case.”

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