OFAC Mitigating Factor Glossary Part 1

What a mitigating factor is in OFAC enforcement, and how it lowers penalties.

TL;DR

TL;DR: A mitigating factor is a circumstance OFAC weighs in the violator's favor when setting a penalty. Voluntary self-disclosure, cooperation, and a strong compliance program are the classic examples.

What a mitigating factor is

In OFAC enforcement, mitigating factors are facts that reduce the severity of a penalty. The most important is voluntary self-disclosure, reporting the violation before OFAC finds it. Cooperation during the investigation and a pre-existing compliance program also weigh in the violator's favor.

Why mitigating factors matter

Because OFAC enforcement is strict liability, intent is not required, and a violation can happen even with no bad intent. When it does, the penalty starts at $356,000 per violation. Mitigating factors are what pull the final amount down, which is why self-reporting and demonstrable controls are so valuable.

Building mitigation into agent payments

The best mitigation is prevention. The sanctionsai.dev API screens a counterparty before an agent pays, returning ALLOW or BLOCK in under 100 ms, so a prohibited payment is stopped before it happens. Maintaining an audit trail of those checks also documents good faith. Not documented: any specific penalty reduction percentages.