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International Projects and the Office of Foreign Asset Control

Last modified: February 10, 2024
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CRITICAL INFORMATION FOR ALL PROJECTS WITH INTERNATIONAL REACH

While international projects are welcome to apply for sponsorship under Compass Charitable Parners, it is important to understand a few things first.  Working in foreign countries, soliciting donations outside the United States, transferring funds internationally, and/or compensating foreign nationals all fall under the prevue of the US Treasury’s Office of Foreign Assets Control regulations.  The Office of Foreign Assets Control, or “OFAC,” is a financial intelligence and enforcement agency that administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives.

It is critical that you get to know the sanctions imposed by OFAC. The United States enforces sanctions and embargoes against foreign nations, organizations, or persons as a reaction to their activities, limiting the types of financial resources, services, or products that American entities are allowed to offer to specific overseas recipients. These sanctions regimes are managed by OFAC. There are sanctions that apply broadly to entire countries or regions, and there are those that are specifically directed at particular organizations or individuals. OFAC keeps an up-to-date roster of the individuals and locations that fall under the U.S. government’s sanctions.

Important OFAC considerations:

  1. Both Compass and our projects must comply with OFAC.
  2. Generally, individuals in the U.S. are forbidden from engaging in commerce or financial dealings with individuals, countries, or areas under sanctions. Nevertheless, in instances where a country or area faces sanctions, OFAC might allow exceptions for specific actions through the issuance of General or Specific Licenses.
    • General Licenses – General Licenses grant broad authorization for U.S. individuals to conduct specified activities. Such a license might also stipulate particular conditions, like adhering to reporting obligations, that organizations need to fulfill when participating in the described activities.
    • Specific Licenses – Should a General License not cover an activity a U.S. individual wishes to undertake or support within a sanctioned area or country, they might still have the option to request a “Specific License” from OFAC, which would allow them to proceed with their intended project. Specific Licenses are granted selectively, tailored to particular scenarios and conditions on an individual basis.
  3. It is not the responsibility of Compass Charitable Partners to determine a project’s OFAC liabilities.  Each sponsored project must determine for themselves if a country or countries you wish to work in is under US sanction or embargo.  If so, you MUST notify Compass.
  4. If you are operating in a country subject to U.S. sanctions or embargoes, Compass may require documentation for any funds disbursed for use in that country, in accordance with the fiscal sponsorship agreement. Failure to submit adequate documentation could lead to the termination of the fiscal sponsorship arrangement.
  5. If your work is in a country affected by U.S. sanctions or embargoes, you must ascertain if a general or specific license is necessary for legal operations there, and ensure you acquire the appropriate license. Should you find that you have secured an incorrect license, or failed to obtain one when required, it’s imperative to inform Compass at your earliest convenience.
  6. Compass reserves the right to perform regular audits on OFAC Licenses. Should we make such a request, you are required to provide evidence of the relevant license within a reasonable timeframe following the request.
  7. Should it come to light that funds are being spent or received in a sanctioned area without the necessary license, Compass holds the authority to demand the reimbursement of all disbursed funds and may terminate your fiscal sponsorship due to non-adherence to our guidelines. Moreover, both Compass and the legal entity associated with your fiscally sponsored project could face legal repercussions. Therefore, it’s crucial to review the Sanctions List thoroughly before conducting any international financial transactions.
  8. Get to know OFAC’s Specially Designated Nationals and Blocked Persons List.  Some sanctions target specific groups or individuals, irrespective of their geographical location. OFAC issues a roster identifying individuals and firms that are either owned by, controlled by, represent, or operate in support of targeted nations. This compilation also includes individuals, groups, and entities identified under sanctions programs not linked to specific countries. These entities and individuals are collectively referred to as “Specially Designated Nationals” or “SDNs,” and the directory maintained by OFAC is known as the “SDN List.”  U.S. individuals, including Compass and our sponsored projects, are barred for engaging in transactions with SDNs, as their assets are blocked or frozen. 
  9. It is YOUR job to verify if the international individuals you collaborate with are classified as SDNs.
  10. Notify Compass immediately if you realize that you have incorrectly given or received money from someone on the SDN List.
  11. Compass reserves the right to carry out regular audits of the SDN List, and upon request, you are obligated to provide Compass with evidence confirming that payees and/or donors are not included on the SDN List.
  12. Should Compass find that you have been transferring or accepting funds from an entity listed on the SDN List, we are entitled to demand the return of all funds disbursed and may terminate your fiscal sponsorship due to a breach of our policies. Furthermore, legal actions could be taken against both Compass and the registered legal entity of your fiscally sponsored project. Therefore, it’s crucial to thoroughly verify the SDN List prior to any international financial transactions.

 

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