Are you aware of the risks involved in doing business with parties sanctioned by the Office of Financial Assets Control (OFAC)? How does this impact your vendor management?
OFAC stands for Office of Foreign Assets Control within the Treasury Department. As part of the U.S. government measure to enforce anti-money laundering/counter terrorism financing regulations, OFAC oversees economic and trade sanctions. These sanctions are against countries, individuals, or outfits engaged in disreputable actions. In other words, they keep a list of individuals and entities with whom you should not do business.
OFAC resonates among security and risk management professionals because it enforces economic and trade sanctions against individuals and groups outside the United States that use cyber attacks to threaten U.S. foreign policy, national security, or economic stability.
OFAC is relevant to you for two reasons:
- It’s another weapon that law enforcement has to deter cyber crime
- Your company may need to develop a new compliance initiative to ensure they do not violate the terms of these sanctions (more on that below)
The penalties for breaching OFAC sanctions include monetary fines ranging from a few thousand dollars to several million, and prison time up to 30 years. This is because OFAC treats violations as a serious threat to national security and foreign relations.
What can you do to minimize OFAC sanctions risk from a vendor risk management standpoint?
The accelerated digital transformation has increased the need and usage of third party vendors, to the point where any given organization engages with dozens or hundreds of them. But using products or services of a sanctioned entity or simply using a sanctioned third party vendor, whether directly or indirectly, could lead to penalties and damage your company’s reputation.
How to prevent the consequences?
Analyzing, identifying, assessing, and mitigating any risks associated with OFAC sanctions requires a high degree of collaboration among teams in an organization, as well as some additional controls in your usual risk assessments.
An adequate compliance solution will depend on a variety of factors, including the type of business involved, and there is no single compliance program or solution suitable for every circumstance.
You can get started by following these tips:
- Perform an OFAC check on any new third party you establish a relationship with
- Make sure to always check certain foundational items to ensure you’re doing business with a legitimate third party
- Include this check as part of your initial due diligence process and your continuous reassessments
- Review contracts to ensure that appropriate provisions are in place
Performing an OFAC check on your vendors is not only a good idea, it’s a best practice you should take starting 2022 (if you haven’t already).
Read More: Top 3 Risk Management Priorities for Security Leaders
Technology can help
At ThirdPartyTrust we believe that OFAC requirements will be getting even more attention in the very near future, and we are here to help. Empowering your company to comply with OFAC regulations, while ensuring you are protected, is a priority for us.
Our Customer Success & Support team provides a new value-added service to customers using the ThirdPartyTrust platform to manage their risk assessments and vendor ecosystems. It screens fourth party relationships to all OFAC lists, addressing matches, and communicating them to our customers.
By helping you keep an eye on OFAC sanctions, the team of experts at ThirdPartyTrust will ensure your TPRM process adapts and grows, and provide you guidance every step of the way.
Reduce third party risk
Global regulators, customers, and business partners expect robust third party risk management programs. TPRM must be scalable, agile, and adaptable in order to support business growth while meeting security standards, such as those from OFAC.
Read More: What is TPRM? The ultimate guide to secure vendor management
If managing an ever growing vendor population while complying with industry and security standards seems like a lot, try TPRM by ThirdPartyTrust. It’s a purpose-built workflow management, document repository and process automation platform that can help you accelerate and scale your vendor risk management program, from initial assessments to continuous monitoring and enterprise risk reduction.
Let us show you how to control your TPRM program while meeting OFAC standards. Talk to an expert today.
Vendor Risk Assessments Should Not Be a Killer
Organizations face rising regulatory pressure coupled by increasing risks. Till now, the process to assess and reduce third party risk has been slow and time consuming, with manual questionnaires and repetitive requests.
This strategy guide explains how to make TPRM easier, solving security and compliance problems for both enterprises and vendors.
