OFAC Sanctions Compliance Policy

1. Purpose

Hromada Inc. (“Hromada”) is a Maryland nonprofit corporation committed to full compliance with all United States sanctions laws and regulations administered by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury. Hromada operates independently and is responsible for its own sanctions compliance. Hromada accepts contributions from donors in the United States and, after sanctions screening of the donor under this policy, from donors outside the United States. All international disbursements are subject to the screening and compliance procedures set forth in this policy.

2. Responsible Parties

1. The Executive Director — Primary Compliance Officer. Responsible for conducting all pre-disbursement screening, maintaining compliance records, and reporting any concerns to the second authorized signer and the Board of Directors.
2. The Director of Technology and Operations — Backup Compliance Officer. Assumes all compliance responsibilities in the event the Executive Director is unable to fulfill their duties. If that position is vacant, the Treasurer serves as Backup Compliance Officer.
3. Second Authorized Signer and Board of Directors. Under Hromada’s dual-control procedures, no outgoing disbursement is released without independent review by a second authorized signer (the Treasurer or the President). The second authorized signer and the Board retain authority to suspend any disbursement pending resolution of compliance concerns.

3. Pre-Disbursement Screening

Prior to any international disbursement, the Compliance Officer shall:

1. Screen the name of the recipient municipality or other recipient organization (the “Recipient”), in both English and Ukrainian transliteration, against the OFAC Consolidated Sanctions List;
2. Screen the full legal name of the Recipient’s signing official (mayor, administrator, or authorized representative) against the OFAC Consolidated Sanctions List;
3. Screen the name of any contractor, vendor, or third-party recipient receiving more than $2,500 in Hromada funds against the OFAC Consolidated Sanctions List. Those known at the time of disbursement are screened before disbursement; those selected afterward are screened when they are identified to Hromada;
4. Conduct screening using OFAC’s Sanctions List Search tool or an equivalent screening service approved by the Board;
5. Document all screening results, including date of screening, names screened, and search results, and retain documentation in Hromada’s compliance file for a minimum of ten (10) years from the date of the transaction the record relates to, or from the date of the screening where no transaction followed;
6. Before accepting a contribution from a donor outside the United States, screen the donor’s name against the OFAC Consolidated Sanctions List and document the result as provided in (e).

4. Prohibited Transactions

No Hromada funds shall be disbursed, directly or indirectly, to:

1. Any individual or entity appearing on the Specially Designated Nationals and Blocked Persons List (SDN List) or any other OFAC sanctions list;
2. Any individual or entity located in, organized under the laws of, or ordinarily resident in the Crimean Peninsula, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, or any other territory of Ukraine not under the effective control of the Government of Ukraine. Displaced communities originating from such territory and now operating in territory under Ukrainian government control are not prohibited;
3. Any individual or entity owned or controlled by, or acting on behalf of, the Russian Federation or persons affiliated with it;
4. Any transaction routed through or involving a financial institution identified on the Sectoral Sanctions Identifications List (SSI List) or otherwise blocked under U.S. sanctions;
5. Any transaction that would otherwise violate Executive Orders 13660, 13661, 13662, 13685, or any subsequent executive orders imposing sanctions related to the Russian Federation or Ukraine.

5. Name-Match Procedures

In the event that sanctions screening returns a potential match:

1. The Compliance Officer shall immediately halt the disbursement and shall not proceed with the transaction;
2. The Compliance Officer shall investigate whether the match is a false positive by comparing available identifying information, including but not limited to dates of birth, addresses, identification numbers, and nationality;
3. If the Compliance Officer determines, with supporting documentation, that the match is a false positive, the disbursement may proceed. The false-positive determination and supporting evidence shall be documented and retained for ten (10) years;
4. If the match cannot be conclusively resolved as a false positive, the Compliance Officer shall notify the second authorized signer and the Board within twenty-four (24) hours;
5. No disbursement shall proceed until the second authorized signer or the Board provides written clearance or the potential match is otherwise resolved;
6. A potential match that cannot be cleared halts the transaction, is reported to OFAC within ten (10) business days, and is escalated to the Board of Directors, as the Financial Controls and Banking Policy requires.

6. Ongoing Monitoring

1. The Compliance Officer shall re-screen all active Recipients and their current signing officials on a quarterly basis, or more frequently if circumstances warrant;
2. Re-screening shall be conducted promptly upon learning of any change in a Recipient’s leadership, project contractors, or other material changes to a recipient’s personnel or organizational structure;
3. The Compliance Officer shall monitor OFAC announcements and Federal Register notices for new or amended sanctions designations related to the Russian Federation, Ukraine, or any other jurisdiction relevant to Hromada’s operations.

7. Due Diligence on Recipients

Prior to onboarding any new Recipient to the Hromada platform, the Compliance Officer shall:

1. Verify that the Project is located in territory under the effective control of the Government of Ukraine, and that the Recipient is not located in any territory described in Section 4(b);
2. Obtain and verify the full legal name and title of the Recipient’s signing official;
3. Where the Recipient is a municipality, confirm that it is a recognized local government entity; in every case, confirm that the Recipient is not a shell entity or front;
4. Obtain a brief written description of the intended use of funds, confirming the project involves civilian infrastructure;
5. Document all verification steps and retain records for a minimum of ten (10) years.

8. Record Retention

All compliance records, including but not limited to screening results, due diligence documentation, false-positive determinations, disbursement approvals, compliance correspondence, and incident reports, shall be retained for a minimum of ten (10) years from the date of the transaction the record relates to, or from the date of the screening where no transaction followed. Records shall be organized by Recipient and made available to the Board and its designated auditors upon request. Where any applicable law or regulation requires a longer retention period, that longer period applies.

9. Training

1. Any individual with authority to initiate, approve, or process disbursements on behalf of Hromada shall review this policy in full prior to assuming such authority;
2. All individuals subject to this policy shall acknowledge in writing, on an annual basis, that they have read, understand, and agree to comply with this policy;
3. The Compliance Officer shall maintain records of all training acknowledgments.

10. Reporting and Voluntary Self-Disclosure

In the event that Hromada becomes aware of any potential sanctions violation or compliance breach:

1. The Compliance Officer shall immediately halt the relevant transaction and take steps to prevent further exposure;
2. The Compliance Officer shall notify the second authorized signer and the Board within twenty-four (24) hours of becoming aware of the potential violation;
3. The Executive Director and the Board shall jointly assess whether a voluntary self-disclosure to OFAC is warranted. Voluntary self-disclosure is strongly encouraged, as it is considered a significant mitigating factor in any OFAC enforcement action;
4. Hromada shall cooperate fully with any investigation by OFAC or other relevant authorities;
5. The Compliance Officer shall document all actions taken in response to the potential violation and retain such records as provided in Section 8.

11. Policy Review and Amendments

This policy shall be reviewed at least annually by the Executive Director and the Board and updated as necessary to reflect changes in applicable law, OFAC guidance, or Hromada’s operations. Any material amendments shall be approved by the Board of Directors.