When President Obama issued the Executive Order that blocked additional North Korean persons and entities, it contained a phrase common to many of OFAC's sanctions regimes:
Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any overseas branch, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:...
(ii) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:
The letter of the Order is clear — the Treasury Secretary can add people and entities to the list contained in the Order. The spirit of the Order is less clear — should U.S. persons be proactive in identifying and blocking property of non-listed persons and entities that meet the criteria for being sanctioned?
In our opinion, while it is operationally expedient, not to mention perfectly legal, to wait until the Treasury Secretary has amended the list, it defeats the purpose of the sanctions program — to deny access to assets to those whom are engaged in acts detrimental to U.S. foreign policy. But there's perhaps an even better reason to perform screening that complies with the spirit rather than the letter of the Order — to avoid the bad publicity of being associated with a business partner that ends up on the SDN list, especially if another regulated firm reports your transactions to the authorities.
Being a good citizen means going beyond the letter of the law at times, even if doing so is inconvenient or even unprofitable. No one would argue against stopping asset transfers by terrorists, whether or not said terrorists are on the SDN list. In a similar fashion, in our opinion, all OFAC sanctions programs should be given equivalent diligence, regardless of any personal feelings about the appropriateness or effectiveness of specific sanctions. Proactive reporting of suspicious transactions by non-listed persons is just the right thing to do, even if OFAC doesn’t specifically require it.