The Office of Foreign Assets Control has focused on sanctions risks in mergers and acquisitions by undertaking which action?

The Office of Foreign Assets Control (OFAC) has consistently emphasized the importance of sanctions due diligence in mergers and acquisitions (M&A). Under the principle of successor liability, an acquiring company can be held responsible for the pre- and post-acquisition sanctions violations of the company it acquires. OFAC has pursued enforcement actions against acquiring firms that failed to conduct adequate, risk-based due diligence to identify and remediate sanctions issues at the target entity. This enforcement posture underscores OFAC's expectation that companies will thoroughly vet M&A targets and integrate them into a robust sanctions compliance program post-acquisition to mitigate inherited risks.

A. OFAC's enforcement is not limited to "knowing" failures. A company can be held liable for violations resulting from negligent or insufficient due diligence, regardless of intent.

C. While OFAC coordinates with other agencies, its primary guidance on this topic is its own "Framework for OFAC Compliance Commitments," not specific joint guidance with the SEC.

D. OFAC's framework does not discourage M&A. Instead, it encourages companies to conduct these transactions in a compliant manner by performing robust due diligence and integrating compliance programs.

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1. U.S. Department of the Treasury, Office of Foreign Assets Control. (2019, May 2). A Framework for OFAC Compliance Commitments. Page 8.

The document states, "Historically, OFAC has pursued enforcement actions against acquiring companies that, following a merger or acquisition, failed to implement an SCP [Sanctions Compliance Program] that adequately mitigates the risks of the newly acquired or merged entity." It further explains that due diligence can prevent liability for past acts, implying that a failure in due diligence can lead to enforcement. This directly supports the choice of option B.