OFAC Sanctions and International Enrollment: Compliance for U.S. Schools

U.S. educational institutions — including independent schools, colleges, and universities — continue to expand their global reach through international enrollment, research collaboration, and philanthropic engagement.

These activities support institutional missions and financial sustainability, but they also introduce evolving regulatory expectations, particularly under U.S. economic sanctions laws administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

A recent OFAC enforcement action involving a U.S. boarding school has renewed attention on the sanctions compliance responsibilities of schools and higher education institutions, especially those that accept tuition, fees, housing payments, or donations from international students, families, sponsors, or affiliated entities.

While the facts of that matter were institution-specific, the broader lessons apply across the education sector.

This blog highlights key considerations for institutional leaders, finance and enrollment teams, and governing boards as they assess sanctions-related risk in an increasingly global operating environment.

Sanctions compliance applies to educational institutions — not just banks

OFAC sanctions apply to all “U.S. persons,” including nonprofit and educational institutions of all types. Importantly, sanctions enforcement operates under a strict liability standard, meaning an institution may face exposure even if it did not intend to violate the law or was unaware that a transaction involved a sanctioned individual, entity, or jurisdiction.

A common misconception is that sanctions compliance rests primarily with banks or payment processors. While financial institutions do conduct their own screening and monitoring, those controls do not transfer legal responsibility away from the school or university. If an institution accepts funds tied — directly or indirectly — to a sanctioned party, the institution itself may face regulatory consequences.

This principle applies equally to tuition payments, housing fees, research funding, donations, refunds, stipends, and other cross-border financial activity common in education.

Why international activity increases risk

International enrollment and engagement inherently introduce additional complexity into institutional payment and funding flows. Sanctions risk may increase when: 

• Tuition, fees, or other charges are paid by third parties, such as parents, relatives, sponsors, employers, agents, or affiliated organizations 
• Payments originate from or are routed through higher-risk jurisdictions 
• The institution has limited visibility into the ultimate source of funds 
• Admissions, enrollment, advancement, and finance processes operate in silos 
• International students, visiting scholars, or research partners are supported by external funding

The role of a risk-based OFAC compliance approach

OFAC does not mandate a one-size-fits-all compliance program. Instead, regulators expect organizations to adopt risk-based controls proportionate to their size, complexity, and international exposure.

For educational institutions engaged in international enrollment or global activity, a thoughtful compliance framework may include: 

• Risk-based screening 
• Documentation practices demonstrating reasonable diligence over source of funds 
• Coordinated internal processes 
• Escalation pathways to advisors 
• Periodic staff training

Importantly, these measures need not be overly complex. What matters is that controls are intentional, documented, and consistently applied.

Financial and operational impacts of OFAC sanctions

Beyond regulatory exposure, sanctions issues can have direct financial and operational consequences, including: 

• Frozen or rejected payments disrupting cash flow 
• Challenges issuing refunds tied to sanctioned parties 
• Delays in enrollment or student onboarding 
• Reputational harm with families, donors, and regulators 
• Increased scrutiny from auditors, lenders, or oversight bodies

For this reason, sanctions compliance should be viewed not only as a legal concern, but also as a financial risk management issue.

The board’s role in risk oversight

Recent enforcement trends suggest that regulators increasingly view sanctions compliance as part of broader enterprise risk management and governance. Boards are not expected to manage day-to-day compliance, but they do play a critical oversight role by confirming that: 

• Management understands the institution’s international risk profile 
• Reasonable policies and controls are in place 
• Accountability for compliance is clearly assigned 
• Sanctions risk is periodically reviewed and escalated when appropriate

A well-governed institution demonstrates awareness, proportional controls, and informed oversight — particularly in areas involving international activity.

Turning awareness into action

The recent enforcement action involving a boarding school serves as a timely reminder that international education and global payments carry evolving regulatory expectations. For many institutions, this is an opportunity to pause, assess current practices, and reinforce a culture of compliance aligned with mission and values.

Schools may benefit from asking: 

• Do our controls reflect our international enrollment and payment profile? 
• How do finance and admissions coordinate around payment acceptance? 
• When was this area last reviewed?

How CLA can help with risk management and internal controls

CLA works with independent schools and higher education institutions to help assess financial, regulatory, and governance risks associated with international operations.

We collaborate with management teams and boards to evaluate existing controls, identify gaps, and support risk-based approaches aligned with institutional goals.