Office of Foreign Assets Control (OFAC) Rules

AE

OFAC is the Office of Foreign Assets Control, which is an agency of the United States Department of the Treasury responsible for administering and enforcing economic and trade sanctions against targeted foreign countries, organizations, and individuals.

Regarding the rules imposed by OFAC for legal entities and persons related to the U.S., the correct answers are A and E:

A. Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules.

This means that a foreign corporation that conducts transactions with a country that is sanctioned under OFAC rules can also be penalized. OFAC applies strict economic sanctions against individuals, organizations, and countries that are involved in activities related to terrorism, narcotics trafficking, and other criminal activities. Any company, regardless of its location, that violates OFAC regulations by engaging in transactions with a sanctioned country or entity can face civil penalties, criminal prosecution, and reputational damage.

E. Nationals of the U.S. must comply with OFAC rules, regardless of where they are located in the world.

This means that U.S. nationals, whether they are physically present within the United States or abroad, must comply with OFAC regulations. U.S. nationals include U.S. citizens, permanent residents, and entities organized under U.S. law, including corporations, partnerships, and limited liability companies. As such, they are prohibited from engaging in transactions with individuals, entities, or countries that are subject to OFAC sanctions, unless authorized by OFAC.

B, C, and D are incorrect answers:

B. A subsidiary of a legal entity of the U.S., which is formally registered in a foreign country, is exempt from OFAC rules.

This is incorrect because a subsidiary of a U.S. legal entity, regardless of where it is registered, is still subject to OFAC regulations. OFAC considers the subsidiary to be a "person" subject to U.S. jurisdiction and, as such, must comply with all OFAC sanctions.

C. A foreign individual visiting the U.S. for a short vacation is obligated to follow OFAC rules.

This is also incorrect because OFAC regulations do not apply to foreign individuals visiting the U.S. for short vacations. However, if a foreign individual engages in a transaction while in the U.S. that violates OFAC regulations, they may be subject to penalties.

D. The head office of a foreign legal entity which has a branch in the U.S. does not need to comply with OFAC rules.

This is incorrect because the head office of a foreign legal entity that has a branch in the U.S. is still subject to OFAC regulations. Any transaction by the foreign legal entity or its head office that violates OFAC regulations can result in civil and criminal penalties.