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What is “OFAC?” Who Must Comply With OFAC Regulations?

By Deal Pack - July 26, 2012

With terrorism and drug trafficking on the rise, it is imperative for banks and US citizens to understand Office of Foreign Asset Control compliance is (OFAC). OFAC is a division of the U.S. Department of the Treasury. Businesses are responsible for following OFAC regulations designed to halt terrorists and other illegal funds from circulating in the U.S.


The treasury has been dealing with sanctions since before War of 1812. OFAC is the successor to Office of Foreign Funds Control or known as the “FFC” which was established in WWII. OFAC was formally created in 1950 with entry of China into the Korean War. Truman blocked all Chinese and North Korean assets subject to U.S. Jurisdiction. OFAC today is enforcing economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers using the blocking of assets and trade restrictions to accomplish national security goals.


If your business is involved in what OFAC would consider “prohibited transactions” such as trade, deposits, withdrawals, transfers, safety deposit boxes, credit checks and loans then you need to comply with the regulations per contract that occurs in everyday business. If you are not compliant you are subject to some hefty fines any where from $50,000 to $10,000,000 ($250,000 per transaction) not to mention imprisonment anywhere from 10 to 30 years depending on the mood of your jury that day.


Dealerships and finance companies must simply check all names they are creating contracts for against the published list created by OFAC known as the Specially Designated Nationals (SDN). This is a consistently updated list of individuals or groups that are acting for or on behalf of, targeted countries as well as lists of terrorists and narcotics traffickers designated under programs that are not country – specific. U.S. Persons are prohibited from dealing with anyone on this list


You can integrate the OFAC regulatory processes into your current application process as opposed to maintaining as a separate process. Currently Deal Pack is integrated with this process so it is one less thing you must think about in your daily routine. If you would like more information, you can visit their website www.treasury.gov/ofac/

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