OFAC Resource Guide

The information contained herein concerning OFAC regulations, penalties and reporting requirements is general in nature and may not reflect recent changes in the law. Accordingly, it is not to be relied upon without referring to the applicable statutes and regulations, nor is it intended to be, and it should not be used or construed as, legal advice. Equifax and CDC assume no liability for any errors or omissions in this guide. Use of OFAC Alert is only one part of a comprehensive compliance program and does not guarantee compliance with applicable law.

 

Compliance Data Center, Inc.

Compliance Data Center, Inc. (CDC) operates and maintains a fully computerized on-line database of individuals, businesses, corporations and other organizations that fail to fulfill their brokerage obligations. CDC also maintains an Office of Foreign Assets Control (OFAC) Database. The reports of non-compliance provided by it's Membership form the core of the database. Also included in the database are disciplinary actions by the SEC, CFTC, NASD, NYSE and the CFTC reparation hearings. CDC provides the Securities Industry with a highly specialized, effective network through which this information is made available to its Members. CDC has been in business since 1962 and was recently acquired by Equifax. For more information, please visit CDC on the web at http://www.cdcinfo.com.

 

OFAC Regulations and Penalties

The Office of Foreign Assets Control (OFAC) is a unit of the U.S. Department of the Treasury. Its charter covers administering and enforcing economic and trade sanctions against targeted foreign countries, terrorism sponsoring organizations and international narcotics traffickers based on U.S. foreign policy and national security goals.

 

Regulations

As part of the U.S. Department of the Treasury, OFAC consists of five regulatory bodies responsible for enforcing OFAC regulations for financial institutions:

  • The Office of the Comptroller of the Currency
  • The Federal Reserve Board
  • The Federal Deposit Insurance Corporation
  • The Office of Thrift Supervision
  • The National Credit Union Administration Examiners

 

Penalties

Individual and Corporate penalties include:

  • Fines of up to 10 million dollars per count against corporations and 5 million dollars against individuals
  • 30 years imprisonment
  • Civil penalties of up to 1 million dollars per incident
  • Forfeiture of funds/other property involved

 

Blocked Persons and Specially Designated Nationals (SDNs)

Any institution that accepts financial payments should conduct OFAC screening. This includes banks, retailers and insurance companies. Until recently, OFAC screening consisted of a process that required manual searches of the OFAC listing provided by the Treasury. This list is not always complete. Therefore, efforts to comply with the regulations frequently fall short of government requirements, which include:

  • Having current listings of SDNs and Blocked Persons as determined by OFAC;
  • Comparing new accounts, new loan customers, wire transfers and other financial transactions to OFAC's listing prior to opening accounts or conducting transactions; and
  • Regularly checking established accounts and other customer transactions against the current OFAC listings.

 

Blocking or Rejecting Transactions

OFAC sanctions programs require financial institutions to block the account and hold the assets involved for disposition by Treasury or to reject a transaction by returning the property to the sender, depending on the regulations that apply to the program associated with the individual or entity.

 

Bureau of Export Administration

A Denied Persons List is maintained by the Bureau of Export Administration (BXA). The BXA list is monitored by Compliance Data Center, as one of data sources. Parties denied import/export privileges are included in this exclusionary list subject to Export Administration Regulations, 15 CFR Part 764 Supplement No. 2. If you have reason to believe a violation is taking place or has occurred, you should report it to the Department of Commerce by calling its 24 hour hot line number: 1 (800) 424-2980. Or if you prefer use its e-mail form to submit a confidential tip, the form can be accessed at: Lead/Tip Form

 

Compliance Officer's Responsibilities

OFAC suggests that every financial institution should establish an OFAC compliance program and develop internal audit procedures to prevent OFAC violations. OFAC suggests several steps that can be taken by a financial institution in setting up an OFAC compliance program.

  • Designated compliance officer - It is suggested that every financial institution designate a compliance officer to be responsible for monitoring compliance with its programs and an officer responsible for overseeing blocked assets.
  • Identify risk in all areas - The compliance officer should assess the risk of OFAC non-compliance in every area of the financial institution. Interdict software can be used to minimize the risk of violations. The use of interdict software is not a defense in civil penalty proceedings. However, OFAC does favorably consider a business decision to use interdict software as well as other good faith manual and electronic compliance efforts in determining mitigation.
  • Assign responsibilities in all areas - It is suggested that formal compliance responsibilities should be assigned to all operations and systems managers. Each department should have rules and procedures for identifying and handling potential violations.
  • Consistent communication - Establish a communication plan for distribution of OFAC information. OFAC suggests including regulatory notices and explanations in organization newsletters, reviews in staff meetings and incorporation of compliance regulations into operating policies and procedures.
  • Distribute information to high-risk areas - OFAC's program brochures and current listing of blocked and specially designated individuals and entities should be distributed to the appropriate areas of the organization. Appropriate measures should be taken to avoid violations in the following at-risk areas:
    • New accounts - All new accounts should be screened against the OFAC Blocked and SDN listing of individuals and entities before funds are made available.
    • Existing accounts - The financial institution's existing customer account base should be screened periodically to ensure that the organization is not currently in violation of OFAC regulations.
    • Wire transfers - Incoming wire transfers should be screened before crediting the appropriate account. Outgoing wire transfers should be screened before being released. All parties of a wire transfer transaction must be screened. This includes any financial intermediaries and reference information.
    • ACH transactions - All ACH transactions received must be screened to ensure that they do not involve a blocked entity before crediting the appropriate account. All outgoing ACH transactions must include a statement that the receiving institution has not violated any OFAC regulations.
  • Training - An OFAC training program should be established in the organization. OFAC suggests publication and distribution of an organization's OFAC policies and procedures to all employees. OFAC also suggests that an organization require all employees to sign a statement indicating they have read and understand the policies and procedures.
  • Internal audits - OFAC suggests that an audit of each department should be conducted at least once a year.

 

OFAC Contact Information

The following OFAC contact information is provided for your convenience and for quick reference. Since OFAC regulations and instructions change periodically, it is important to ensure that contact information is kept current and in concurrence with both the OFAC compliance office requirements and your own institution's compliance policies.

 

US Treasury Contact Information
  • OFAC Compliance Hotline 800-540-OFAC (6322) or 202-622-2490
  • OFAC Fax-on-Demand Service 202-622-0077
  • Cuban Violation Hotline - OFAC Miami 305-810-5170
  • OFAC Licensing Division 202-622-2480

 

Department of Commerce Contact Information
  • Bureau of Export Administration 800-424-2980

 

Equifax Contact Information
  • Equifax SBS Sales 800-202-4025
  • Equifax Customer Support 800-685-5000

 

If you are a customer of an Equifax System Affiliate or a local credit reporting agency, please contact your local customer service center.