Making a List

Shippers/consignees, forwarders, NVOs, carriers and 3PLs BEWARE : “persons subject to U.S. jurisdiction are prohibited from engaging in economic transactions with persons/organizations on these lists.”

What list? The Office of Foreign Assets Control (OFAC) has compiled a list of more than 8,000 “persons or organizations” that those under U.S. jurisdiction are forbidden to trade with. And the list grows monthly.

OFAC is finally getting behind enforcing prohibitions on trading with pariahs on this long-maintained list because of security and terrorism concerns. Given the track record of government bureaucracy, it’s no wonder OFAC enforcement has been spotty or non-existent in the past. A new list of prohibited partners [] has been available since July, and the agency is taking more aggressive action. Now a high priority, enforcement takes the form of fining and publicizing the offending company. One lesson our government learned from Iraq is the danger of turning a blind eye to sanctions enforcement.

Now you must cope with the new real-politik approach to enforcement. That will be difficult for a variety of reasons. If by luck all your transactions are automated, you can match the DoD, State, and Treasury Department (OFAC reports to Treasury) lists against those that you trade with currently and have traded with in the past. Recent fines and adverse publicity resulted from violations committed as far back as 1998.

If your transactions are not automated, it won’t be easy. Even using software, or your own manual checking, entities that find themselves on the lists will go to some pains to mask their identities. How this subterfuge affects your liability is an open question, and not an insignificant one. Beyond the question of compliance, some in your company may not be willing to lose lucrative trade with say, some countries in the Middle East or even with Cuba. They could make a case for continuing based on past lax enforcement.

Indications are that the era/error of indulgence is now past.

For the past two decades, we’ve accepted that the world was shrinking because of “free” trade, global communication, and instant commerce. The actions of a few “haters” have made the world much larger. A blow was dealt to trade, and even to free enterprise itself. Even if you were not directly affected by past attacks, other than emotionally, OFAC actions illustrate that the threat continues to impact every one of us.

The dumb move of this year was an ABC “News” piece by Brian Ross, pointing out how vulnerable the United States is by shipping via container depleted plutonium pellets into a West Coast port. Naturally, as we approach the 2004 elections, ABC’s piece laid blame on the Bush administration. Time and the new opiate of the masses—big media—can cause us to forget the real nature of the homeland security challenge.

Security costs will continue, both large and incremental. But any honest observer has to admit passive security measures alone will never get the job done. Homeland security must include active measures. Regardless of media distractions, especially as we move into an election year, let’s strive to never forget.

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