What is ofac responsible for

An employer attempting to run an OFAC check on their own could easily misidentify a candidate on the list. If a bank processes a transaction from a list of specially designated nationals and blocked persons, it would be considered unlawful.

For example, if an offshore bank transfer is routed through a U. The definition of assets and property is specifically defined within each sanction program, but it includes anything that is direct or indirect, present, future, or contingent value. This includes all bank transactions.

All banks must block transactions that:. After it is received, a payment order cannot be canceled or amended without an authorization from the OFAC. In some cases, a transaction may be prohibited but there is no blockable interest. In other words, the transaction should not be accepted but there is no OFAC requirement to block the assets. In these cases, the transaction is simply rejected and not processed.

However, since the SSR requires blocking transactions with the government of Sudan, and exportation of services to Sudan is prohibited, the U. OFAC has the authority to permit certain transactions that would otherwise be prohibited under its regulations. This is done through a concise licensing process and is determined when a transaction does not undermine U. This also happens when a transaction is justified by U. OFAC offers a general license that authorizes categories of transactions.

One example is allowing reasonable service charges on blocked accounts, without the need for a case-by-case review from the OFAC. General licenses can be found in the regulations for each sanctions program.

Before processing these transactions, a bank will verify that a transaction meets the relevant criteria.

The OFAC also issues specific licenses on a case-by-case basis. This is a written document that authorizes a particular transaction or set of transactions that are limited to a specific time period. To receive a specific license, a person or entity must submit an application to the OFAC.

If the transaction conforms to internal licensing policies and U. S foreign policy objectives, then the license is generally issued. If a customer claims to have a specific license, a bank must verify that the transaction conforms to the terms and conditions of the license. The United States plays an important role in the international fight against money laundering, terrorism financing, and other financial crimes — and does so by imposing economic sanctions against the countries, entities and individuals engaged in those activities.

OFAC maintains several sanctions lists, each dealing with a group of targets. OFAC sanctions are implemented in two categories:. All individuals, banks, financial services companies and other obligated institutions operating under United States jurisdiction must comply with OFAC sanctions.

OFAC does issue certain sanctions exemptions which can be obtained via application to the Treasury Department. Performing an OFAC sanctions search manually can be administratively challenging and inefficient. Consolidated Sanctions List. Additional Sanctions Lists.

Sanctions Programs and Country Information. Frequently Asked Questions. Contact OFAC. Financial Literacy and Education Commission. Innovations in Financial Services. Featured Research. Exchange Stabilization Fund. International Monetary Fund. Multilateral Development Banks. Exchange Rate Analysis. Small and Disadvantaged Business Utilization. Small Business Lending Fund. State Small Business Credit Initiative. Daily Treasury Yield Curve Rates.

Daily Treasury Bill Rates. Daily Treasury Long-Term Rates. Monthly Treasury Statement. Daily Treasury Statement. National Debt to the Penny. Most Recent Documents. S International Portfolio Investment Statistics. Release Dates. Forms and Instructions. Report Scam Attempts. Report Fraud Related to Government Contracts. Direct Express Card. Similarly, banks that have relationships with third-party service providers should assess those relationships and their related ACH transactions to ascertain the bank's level of OFAC risk and to develop appropriate policies, procedures, and processes to mitigate that risk.

In these situations, the ODFI must exercise increased diligence to ensure that illegal transactions are not processed. Due diligence for an inbound or outbound IAT may include screening the parties to a transaction, as well as reviewing the details of the payment field information for an indication of a sanctions violation, investigating the resulting hits, if any, and ultimately blocking or rejecting the transaction, as appropriate. The procedure applies to transactions that would normally be blocked as well as to transactions that would normally be rejected for OFAC purposes based on the information in the payment.

An OFAC compliance program should also include policies, procedures, and processes for handling validly blocked or rejected items under the various sanctions programs. When there is a question about the validity of an interdiction, banks can contact OFAC by phone or e-hot line for guidance.

Most other items should be reported through usual channels within ten days of the occurrence. The policies, procedures, and processes should also address the management of blocked accounts. Banks are responsible for tracking the amount of blocked funds, the ownership of those funds, and interest paid on those funds. Total amounts blocked, including interest, must be reported to OFAC by September 30 of each year information as of June When a bank acquires or merges with another bank, both banks should take into consideration the need to review and maintain such records and information.

Banks no longer need to file SARs based solely on blocked narcotics- or terrorism-related transactions, as long as the bank files the required blocking report with OFAC. However, because blocking reports require only limited information, if the bank is in possession of additional information not included on the OFAC blocking report , a separate SAR should be filed with FinCEN that would include such information.

Maintaining license information. This will allow the bank to verify whether a customer is initiating a legal transaction. Banks should also be aware of the expiration date on the OFAC license. If it is unclear whether a particular transaction would be authorized under the terms of the license, the bank should contact OFAC. Maintaining copies of OFAC licenses will also be useful if another bank in the payment chain requests verification of a license's validity.

Copies of OFAC licenses should be maintained for five years, following the most recent transaction conducted in accordance with the license. Every bank should conduct an independent test of its OFAC compliance program that is performed by the internal audit department, outside auditors, consultants, or other qualified independent parties.

For large banks, the frequency and area of the independent test should be based on the known or perceived risk of specific business areas.

The person s responsible for testing should conduct an objective, comprehensive evaluation of OFAC policies, procedures, and processes. It is recommended that every bank designate a qualified individual s to be responsible for the day-to-day compliance of the OFAC compliance program, including changes or updates to the various sanctions programs, and the reporting of blocked or rejected transactions to OFAC and the oversight of blocked funds.

The bank should provide adequate training for all appropriate employees on its OFAC compliance program, procedures and processes. The scope and frequency of the training should be consistent with the bank's OFAC risk profile and appropriate to employee responsibilities. In general, the regulations that OFAC administers require banks to do the following: Block accounts and other property of specified countries, entities, and individuals.

Prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals. Blocked Transactions U. Banks must block transactions that: Are by or on behalf of a blocked individual or entity; Are to or go through a blocked entity; or Are in connection with a transaction in which a blocked individual or entity has an interest.

Prohibited Transactions In some cases, an underlying transaction may be prohibited, but there is no blockable interest in the transaction i. OFAC Licenses OFAC has the authority, through a licensing process, to permit certain transactions that would otherwise be prohibited under its regulations.