The shifting landscape of U.S. sanctions policy has made compliance a growing priority for Israeli businesses engaged in international trade, investment, and finance. With new restrictions, secondary sanctions, and growing enforcement pressure, companies across Israel—from exporters to fintech startups—are turning to OFAC lawyers for guidance.

Why OFAC Sanctions Matter for Israeli Businesses

Israel maintains strong trade and financial ties with the United States. But with OFAC’s jurisdiction extending to all U.S.-linked transactions—including those conducted in U.S. dollars or through U.S. banks—Israeli businesses must ensure they are not inadvertently violating sanctions rules.

Even indirect contact with restricted entities can trigger blocked transactions or compliance reviews. Companies working in sectors like logistics, tech, defense, or payments are especially vulnerable if they engage with jurisdictions or third parties that raise OFAC concerns.

New Challenges: How the Sanctions Environment Is Changing

In 2023–2024, OFAC intensified its use of secondary sanctions, especially in cases involving indirect business with restricted countries like Iran, Syria, and Russia. More recently, transactions routed through jurisdictions such as the UAE and Turkey have drawn increased scrutiny.

As such, Israeli firms working with regional partners—including those based in Ankara—must be cautious. Read more about these developments on the turkey sanctions page.

The challenge is compounded by fast-evolving rules, overlapping regimes (U.S., EU, UN), and growing enforcement risks.

The Role of Lawyers in Building Sanctions Compliance

Legal professionals specializing in OFAC regulations provide much-needed clarity in this high-risk environment. Their work includes:

• auditing company processes and exposure to high-risk jurisdictions;

• identifying indirect ownership links to sanctioned parties;

• developing internal policies and escalation procedures;

• advising on licensing and regulatory communications.

They also help companies avoid inadvertent violations by flagging problematic language in contracts, distribution agreements, or supplier chains.

Tools Used by OFAC Specialists: Licensing, Monitoring, Documentation

Certain transactions may still be permitted if authorized through a specific license from OFAC. Lawyers help businesses prepare these license applications, ensuring they meet all procedural and legal requirements.

In addition, they set up automated screening tools that flag restricted entities using up-to-date OFAC sanctioned countries lists. Real-time monitoring of updates, audit trail management, and internal training are all critical elements of a functioning compliance framework.

Companies also benefit from guidance on how to document due diligence, respond to queries from financial institutions, and file voluntary disclosures where needed.

Case Studies: Avoiding Frozen Payments and Penalties

One Israeli logistics firm recently faced a blocked payment by a U.S. correspondent bank due to red flags around a third-party vendor. With legal support, the company submitted documentation showing no ties to sanctioned entities. Funds were released within two weeks.

In another example, a Tel Aviv-based fintech startup negotiating with a Turkish distributor faced a banking warning due to potential links to sanctioned individuals. Legal counsel conducted a thorough analysis, flagged indirect risk exposure, and helped the company restructure the deal through a compliant intermediary.

What Israeli Companies Need to Know Now

To remain compliant and resilient in this sanctions-heavy environment, Israeli businesses should:

• conduct regular risk reviews of counterparties, supply chains, and funding sources;

• integrate sanctions screening into onboarding and transaction monitoring processes;

• seek legal advice before proceeding with higher-risk deals involving flagged jurisdictions;

• avoid engaging with sanctioned persons or countries without prior OFAC authorization.

Sanctions are no longer a niche regulatory issue—they are a core risk factor for internationally active businesses. Working with experienced OFAC lawyers helps Israeli companies not only avoid fines and frozen assets but also maintain long-term credibility and access to global markets.