By Ronald I. Meltzer, Brent J. Gurney, David M. Horn, Sarah Ganslein
When OFAC added Colombian sports franchise Envigado Fútbol Club to its sanctions list in June 2014, the news conjured up echoes of past dark days of “narco-fútbol,” when the tentacles of organized crime touched the country’s business and social institutions at all levels. In a broader context, perhaps the most striking aspect of the Envigado designation was its diminishing importance amid the new array of compliance imperatives facing Colombian companies in a rapidly changing global environment. Trade compliance is quickly becoming not just a necessity but also a big plus factor that can work in Colombia’s favor: a strong reputation for trade compliance and effective internal controls can provide an important competitive advantage for Colombian companies in the global marketplace.
Over the last decade, Colombia has made great strides toward shaking off the shadows of an era marked by corruption and violent internal conflict. By 2014, Colombia overtook Argentina to become Latin America’s third-largest economy. And, with the country’s marked advances toward a peace agreement and a growing international economic presence, the relevance of U.S. export control and sanctions requirements for Colombian companies has changed: it has shifted from narrow concerns about being named as OFAC targets to a larger perspective that regards trade compliance as a key business principle to enhance competitive advantage and to expand opportunities for continued growth.
During this same period, U.S. sanctions and export controls also have undergone significant change. As Colombia emerges as an economic force, and begins a new phase in its trade partnership with the United States, Colombian businesses must address requirements of trade compliance that extend far beyond the realm of punitive economic sanctions, which were first imposed by OFAC’s predecessor, the Treasury Department’s Office of Foreign Funds Control (FCC), as part of the U.S. wartime effort in the 1940s. In the current environment, trade compliance is based on various, overlapping regulatory requirements that present as many opportunities for competitive gain as they do risks for the imposition of penalties and business harm.
The History of US Strategic Trade Controls
To understand the current U.S. sanctions and export controls regime, it is instructive to look back at the phases of its development and the competing domestic and global pressures that have shaped the compliance and enforcement landscape we know today.
After blocking the Axis powers’ financial assets during World War II, the FCC became the Office of Foreign Assets Control (OFAC) during the Korean War, claiming its long-term role as the U.S. government’s primary instrument of economic warfare. The U.S.-Colombia political and trade relationship was born during the same era, when, post-WWII, the United States became Colombia’s primary market for exports, and Colombian soldiers fought alongside U.S. troops in the Korean War under the United Nations banner.
