OFAC encourages firms operating in the securities industry, including securities intermediaries and custodians, to implement measures that mitigate the risk of providing services to, or dealing in property in which there is an ownership or other interest of, parties subject to U.S. sanctions. Such measures should be tailored to and commensurate with the sanctions risk posed by a firm’s business activities. Best practices include:
Making customers aware of the firm’s U.S. sanctions compliance obligations and having customers agree in writing not to use their account(s) with the firm in a manner that could cause a violation of OFAC sanctions. Sanctions may be implicated when the United States is the jurisdiction of issuance or custody of an underlying security or when a U.S. person acts as a custodian or other service provider.
Conducting due diligence, including through the use of questionnaires and certifications, to identify customers who do business in or with countries or persons subject to U.S. sanctions. Such customers may warrant enhanced due diligence because of an increased risk that they will use their accounts to hold assets or conduct transactions for third parties subject to sanctions.
Imposing restrictions and heightened due diligence requirements on the use of certain products or services by customers who are judged to present a high risk from an OFAC sanctions perspective. Restrictions might include limitations on the use of omnibus accounts, where a lack of transparency can be exploited in order to circumvent OFAC regulations.
Making efforts to understand the nature and purpose of non-proprietary accounts, including requiring information regarding third parties whose assets may be held in the accounts. Red flags may arise relating to geographic areas or the nesting of third-party assets.
Monitoring accounts to detect unusual or suspicious activity – for example, unexplained significant changes in the value, volume, and types of assets within an account. These types of changes may indicate that a customer is facilitating new business for third parties that has not been vetted for possible sanctions implications.
FAQs
The Office of Foreign Assets Control ("OFAC") of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities ...
Why would someone be on the OFAC list? ›
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted foreign jurisdictions and regimes, as well as individuals and entities engaging in harmful activity, such as terrorists, international narcotics traffickers, weapons of ...
How do I find out if someone is on the OFAC list? ›
OFAC's Sanctions List Search tool employs fuzzy logic on its name search field to look for potential matches on the Specially Designated Nationals (SDN) List and on its Non-SDN Consolidated Sanctions List.
What transactions are subject to OFAC? ›
What Bank Transactions are Subject to OFAC Regulations? Every transaction that a United States financial institution engages in is subject to OFAC laws and regulations. If a bank processes a transaction from a list of specially designated nationals and blocked persons, it would be considered unlawful.
What to do if you get an OFAC hit? ›
If you are unsure whom to contact, you should contact your screening software provider which told you there was a “hit.” If you can't tell what the “hit” is, you should contact your screening software provider which told you there was a “hit.”
What does it mean to be blocked by OFAC? ›
OFAC authorities may require U.S. persons to block all property and interests in property of certain persons, known as "blocked persons." When this is the case, any property and interests in property of a blocked person that are within the United States or within the possession or control of a U.S. person must be ...
Who is targeted by OFAC? ›
The Office of Foreign Assets Control administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers.
What is an OFAC warning? ›
OFAC Screen is a service that alerts the user that a consumer's personal information possibly matches a subject on a list of individuals and entities that are prohibited by the U.S. Treasury from doing business in or with the United States.
What needs to be reported to OFAC? ›
Pursuant to OFAC reporting regulations, holders of blocked property — including financial institutions — must report blocked property to OFAC within 10 business days from the date the property was blocked. The report may be filed by the holder of the blocked property or by an attorney on behalf of the holder.
What is a red flag for a potential OFAC violation? ›
Red flags may arise relating to geographic areas or the nesting of third-party assets. Monitoring accounts to detect unusual or suspicious activity – for example, unexplained significant changes in the value, volume, and types of assets within an account.
All U.S. persons must comply with OFAC sanctions, including all U.S. citizens and permanent residents regardless of where they are located, all individuals and entities within the United States, and all U.S. incorporated entities and their foreign branches.
What is the penalty for violating the OFAC? ›
Criminal penalties of up to $1 million can be imposed for willful violations, and individuals who willfully violate the prohibition can face up to 20 years in prison.
What is the OFAC background check? ›
An OFAC SDN search involves checking the list to ensure that the individuals and entities with which your company does business have not been sanctioned. U.S. businesses are prohibited by OFAC from doing business with anyone who appears on the SDN list.
What is the role of OFAC officer in financial institutions? ›
The BSA/OFAC Officer is responsible for developing, implementing, administering, and monitoring all aspects of the Credit Union's BSA/AML/OFAC Compliance Program. The individual is expected to be knowledgeable in all aspects of BSA/AML/OFAC.
Who is subject to the Office of Foreign Assets Control? ›
Under presidential national emergency powers, OFAC carries out its activities against foreign governments, organizations (including terrorist groups and drug cartels), and individuals deemed a threat to U.S. national security.
How long does it take OFAC to release funds? ›
It could take anywhere from six to thirty months to receive OFAC's decision on an unblocking application. Unfortunately for those who have had their funds blocked due to mistaken identity, there are no legal means to expedite the process.
