OFAC Check: Everything You Need to Know
If you have questions about an OFAC or The Office of Foreign Assets Control check, you've come to the right place. 3 min read
If you have questions about an OFAC check, you've come to the right place. The Office of Foreign Assets Control (OFAC) in the U.S. Treasury Department regulates penalties, of sanctions, put on foreign countries and other groups that engage in activities that threaten out nation's security and economic well-being. Their goal of is stop money flow to those involved with terrorism, narcotics, and or human trafficking by requiring American businesses to check who they are doing business with. The U.S. government imposes sanction and restrictions on trading with certain nations and their companies. Companies are responsible for checking which nations and companies with which they are not allowed to engage in business interactions.
You can look up a person's or company's name in an OFAC search on the U.S. Treasury's website. All documents are public and easy to access. They are updated when necessary and there are records of post information. There will be a check on the person's or company's name against the Specially Designated National list. An example of a search is:
John Andrew Doe, Smith, George Q. Airways Charters, Inc.
You can search for up to 500 names at a time. It is a company's or individual's responsibility to stay up to date with new information.
Lists firms should check regularly
- Office of Foreign Assets Control (OFAC) Home Page
- OFAC Alphabetical Listing of Specially Designated Nationals (SDNs) and Blocked Persons
- OFAC Alphabetical Listing of Foreign Sanctions Evader (FSE)
- OFAC Alphabetical Listing of Sectoral Sanctions Identifications (SSI)
- OFAC Alphabetical Listing of Palestinian Legislative Council (PLC)
What is an OFAC background check- and Should I Use It?
Making a positive identification can be difficult since many of the names are common Arabic names. Automated OFAC checks should only contain names. It is important to remember to make correct identifications and avoid discrimination practices.
How well do you Know Your Customer?
The major issue for financial services, banking and other regulated industries is knowing their customers and their customers' needs. This goes beyond knowing a face at your counter, a voice on the phone, or the handwriting of a signature.
An OFAC search consists of more than validating Social Security numbers. Financial institutions such as bank are most likely to fall victim to charges of having illegal dealings because of the anonymity of their client base and concentration of funds. To avoid financial loss they should take extra care to screen for fraud so that individuals and organizations can see how other companies intend to commit fraud. Fraudulent entities can try many different methods to use an American business. An OFAC search provides you with the ability to identify straw buyers, sub-entities, and aliased individuals.
Why it's Important
Whether your business is a physical space, virtual storefront, or operated via phone, you need to definitively identity the identity of your customers. Otherwise you risk being complicit and or liability. Exercising caution is crucial because it can help keep the U.S. secure. Terrorists and criminals seek to use the business community. This came to the government's attention. They learned that it is easier to interfere with or track the flow of criminal funds than it is to prosecute the underlying criminal activity. Proper Customer Identity Verification in addition to a OFAC search provides a clear mind because of its detailed screening process.
Specially Designated Nationals
The known terrorists, narcotics traffickers, and those involved in the proliferation of weapons of mass destruction are included in the list of OFAC SDN. All employers in the United States are legally required to comply with the OFAC requirements. They must screen their employees. Individuals and organizations in the United States are responsible for ensuring that they don't engage in business dealings with individuals or entities listed on the Office of Foreign Asset Control (OFAC).
The OFAC enforces economic and trade sanctions based on U.S. foreign policy and national security goals. Their goal is to make sure terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction do not benefit from business dealings with U.S. businesses or individuals. The federal law was designed to combat money laundering and terrorist financing. It increased the number of industries required to conduct screenings. It the responsibility of businesses in America to ensure that they are not benefiting criminals or terrorists by checking the OFAC list.
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