OFAC's Extraterritorial Reach: Prohibited Transactions

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The Office of Foreign Assets Control (OFAC) is a division of the U.S. Treasury Department that administers and enforces economic and trade sanctions against individuals, organizations, and countries that pose a threat to national security or foreign policy. OFAC's extraterritorial reach refers to its authority to apply U.S. sanctions to transactions that occur outside of the United States, involving non-U.S. individuals, entities, or countries.

The key aspect of OFAC's extraterritorial reach that specifically relates to prohibited transactions is the prohibition or rejection of unlicensed trade and financial transactions with specified countries, entities, and individuals. This means that any transactions that involve individuals, entities, or countries that have been sanctioned by OFAC must be licensed by OFAC before they can take place. If a transaction is not licensed by OFAC, it is considered prohibited, and any person or entity involved in the transaction may be subject to civil or criminal penalties.

Option A, "Prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals," is the correct answer, as it accurately describes the key aspect of OFAC's extraterritorial reach that relates to prohibited transactions. Option B, "Prohibit or reject licensed trade and financial transactions with specified countries, entities, and U.S. individuals," is incorrect because it describes licensed transactions, which are not prohibited. Option C, "Prohibit or reject licensed trade and financial transactions with specified countries, entities, and non-U.S. individuals," is also incorrect because it refers to licensed transactions, not prohibited transactions. Option D, "Prohibit or reject unlicensed foreign trade and financial transactions with specified countries, entities, and individuals," is incorrect because it does not specify whether the transactions involve U.S. or non-U.S. individuals, entities, or countries.