Is Your Organization OFAC Compliant for 2020?

The Office of Foreign Asset Control (OFAC) is a division of the U.S. Treasury Dept. OFAC administers economic sanctions involving certain nations, groups, and individuals. The U.S. Patriot Act requires that all companies and individuals doing business in the U.S. must comply with OFAC regulations. At a high-level, OFAC requires the blocking of accounts and property of specified countries, entities and individuals. It also prohibits unlicensed trade and financial transactions with sanctioned countries, entities and individuals.

All U.S. residing persons and U.S. banks, domestic branches, agencies, international banking facilities, foreign branches and overseas offices and subsidiaries are required to comply with OFAC regulations when transacting in U.S. dollars. This includes U.S. branches of foreign financial institutions, as well as U.S. persons working at foreign corporations outside of the U.S. at the time the transactions are processed.

OFAC regulations impact and effect certain industries and businesses more than others. The following is a list of industries that are affected by OFAC compliance:

Financial and banking industry
Credit bureaus & reporting agencies
Insurance industry
Travel and tourism industry
Import and export industry
Non-Governmental Organizations (NGO)
Non-profit agencies
Business registration & filing companies

OFAC SDN & Other Lists

OFAC maintains a list of targets, called the Specially Designated Nationals list, or SDN. The list contains the names of persons, entities, and countries that are subject to restrictions or prohibited from transacting any business in the United States. Violations resulting from a failure to comply with OFAC regulations may result in substantial civil monetary penalties and fines. The SDN list includes over 20,000 names of organizations and individuals associated with an OFAC sanction program. U.S. organizations and individuals are prohibited from making transactions with SDNs.

In addition, there are several OFAC Lists that must be checked against. All lists are updated on the U.S. Treasury website.

Sectoral Sanctions Identifications (SSI) List
Foreign Sanctions Evaders (FSE) List
Non-SDN Iranian Sanctions Act (NS-ISA) List
Non-SDN Palestinian Legislative Council (NS-PLC) List
Persons Identified as Blocked Solely Pursuant to Executive Order 13599 (13599) List
Foreign Financial Institutions Subject to Part 561 (Part 561) List
Correspondent Account or Payable-Through Account Sanctions (CAPTA) List

OFAC Targeted Activities

List of active sanction programs under OFAC apply to the following countries and activities:

Conflict Diamonds
Cyber-related Crimes
Foreign Election Interference
Human Rights Abuse (Magnitsky Act)
Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGT)
WMD Profileration

Foreign Terrorist Organizations (FTOs) are foreign organizations that are designated by the Secretary of State, Bureau of Counterterrorism, in accordance with Section 219 of the Immigration and Nationality Act (INA). U.S. financial institutions must retain possession of (or control) and report any funds from an FTO to the OFAC.