OFAC Sanctions Status Clause

Summary

This clause can be used in an international sale of goods contract wherein the buyer represents that it is not directly or beneficially owned by any person on the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) List of Specially Designated Nationals and Blocked Parties (SDN List). This clause includes practical guidance and drafting notes. OFAC sanctions programs target specific countries, groups, individuals, and activities (such as narcotics trafficking, transnational criminal activity, terrorism, weapons proliferation, and cybercrime). Most sanctions programs involve asset blocking, restrictions on specific transactions, or both. These sanctions programs vary in scope. See 31 C.F.R. § 501.101 et seq. In addition to the regulations, the primary resource used by entities to ensure compliance with U.S. sanctions is the SDN List maintained by OFAC, which lists individuals, entities, and vessels with which U.S. persons are generally prohibited from conducting any business. Note that this clause also includes a buyer covenant, which expressly states that buyer will promptly notify the seller if any new or existing owner becomes the subject of any of OFAC sanctions. For a full listing of related contract clauses, see General Commercial Contract Clause Resource Kit. For more information on OFAC, see OFAC Regulations Fundamentals.