The global economy relies heavily on cross-border transfers of funds, goods and services, which are increasingly subject to economic sanctions administered and enforced by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), among other regulatory authorities. As a result, investigations involving potential sanctions violations are becoming more prevalent as these regulatory authorities and enforcement agencies continue to use sanctions as a tool to influence foreign behavior and mitigate national security risks.
Entities seeking to circumvent sanctions regulations often undertake elaborate measures to obfuscate their business activities from counterparties and ‘or avoid detection by government agencies. These illicit actors may disguise transactions through complex payment processes, shell corporations, subsidiaries or other methods that exploit the intricacies of global transactions and financial instruments to hide the true source and use of funds, goods or services. To prevent and detect such sanctions violations and mitigate regulatory risk, organizations should implement effective sanctions compliance programs and investigate indicators of potential violations. Leveraging innovative investigative techniques and tools, along with consultants possessing specialized forensic knowledge, is critical to implementing these compliance programs, conducting investigations, and ensuring the efficacy and sustainability of sanctions compliance programs.
This chapter outlines the principal investigative methodologies and best practices employed by forensics professionals in sanctions investigations and highlights analytical tools to uncover facts and patterns in complex transactions designed to circumvent economic sanctions. This chapter presents a combination of best practices, published guidance from OFAC and examinations of recent regulatory enforcement actions to help explain the evolving sanctions environment. And it aims to support forensic and compliance professionals in developing and enhancing a sanctions compliance program (SCP).