Documentation Can Help Avoid Sanctions Compliance Scrutiny After COVID-19 Pandemic Ends, Trade Lawyer Says

Companies involved in sanctions compliance should closely communicate with regulators during the COVID-19 pandemic and carefully document compliance procedures during work-from-home operations, according to Nicole Sayegh Succar, a trade lawyer with Crowell & Moring. Those steps could minimize scrutiny and potential sanctions penalties after the pandemic subsides, Succar said during an April 2 webinar hosted by the law firm.

After the pandemic ends, agencies that oversee sanctions, such as the Treasury Department’s Office of Foreign Assets Control, may review how companies maintained their sanctions compliance programs during the coronavirus outbreak response measures, Succar said. They may look at “how you might have reacted to COVID-19 and what you might have done to adjust your programs to cope,” she said. Companies should be ready to tell agencies about changes they made to their sanctions alert management process and “how this still protects your program.”

Companies should also track and document their remote compliance procedures during the pandemic, which will be helpful if an unintentional sanctions violation occurs, Succar said. Documentation may be able to prove to OFAC or another sanctions regulator that the “root cause” of the violation arose from the response to control the impact of thea pandemic, not because of a faulty sanctions compliance program. “We're not trying to use the pandemic to get us out of trouble. I think folks will see right through that,” she said. “But if you have strong data that shows that [the coronavirus response] might have been part of the issue,” that could mitigate sanctions penalties.

While teleworking, companies may experience a range of issues with their sanctions alert management processes that could lead to violations, Succar said. Compliance personnel working from home may feel “pressure to rush through alerts” to try to match the same amount of work they completed in the office, she said. “What we should make clear is that quality still matters more than the quantity,” Succar said, “and we want to avoid potential sanctions violations that will inevitably occur if quality is compromised.”

Succar also stressed the importance of communication with regulators, adding that some agencies have issued notices urging industry to reach out if they are experiencing issues with compliance programs due to telework or other COVID-19-related issues. Companies should also not hesitate to request any extensions for deadlines imposed by OFAC or other agencies. “Ask for extensions now,” Succar said, “not when you miss them or when you're about to miss deadline.”