Written by attorney Max M Alavi

OFAC Voluntary Self-Disclosure

The Code of Federal Regulations provides for a person who believes he/she has possibly violated some provision of The Iranian Transactions Regulations to come forward voluntarily and before any action or investigation has been initiated by the Treasury Department, Office of Foreign Asset Control (OFAC) and declare truthfully and completely any and all acts that may constitute violations and thereby possibly avoid penalties in whole or in part.

Once the possible violation is divulged, OFAC uses a four part matrix to determine the base penalty. The factors considered are 1) whether there was a valid and timely voluntary self-disclosure and 2) whether the violation divulged was of an egregious nature. Therefore the possibilities in this matrix are valid VSD and not egregious, valid VSD and egregious, invalid VSD and egregious, invalid VSD and not egrigous.

The base penalty will be capped at $125,000.00 if the facts show that the violation was not egregious and capped at $250,000.00 if OFAC determines that it was an egrigous violation.

The factors that go into the determination of the penalty include whether it is the first time the individual has committed such a violation and whether he/she has substantially cooperated during the voluntary self-disclosure. In many situations no penalty or a negligible penalty may be imposed if the case is presented properly and the appropriate facts and cooperation are given.

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