WHAT IS OFAC?

OFAC is a database compiled by the Office of Foreign Assets Control which identifies “Specially Designated Nationals” (SDN) with whom you are prohibited from doing business.  An SDN is a person or entity identified by the federal government as being linked to illegal activity.

WHOM DOES OFAC APPLY TO?

OFAC applies to all business transactions.  For a dealership this means it applies to all car sales, car rentals, services, and parts.  But you aren’t safe merely ensuring your customers aren’t on the list.  You must also verify that your vendors and employees are not on the list.  Just how sure are you about that shifty wholesaler you’ve been dealing with?  Unfortunately, because the list changes frequently, you must check the list before every transaction.

HOW DO I ACCESS THE OFAC LIST?

The OFAC list of “Specially Designated Nationals” is maintained by the US Department of Treasury and can be found on their website.  The list is updated frequently so I’d advise you to sign up to receive notification when the list changes.

PENALTIES FOR NON-COMPLIANCE

The penalties for conducting business with a person or entity listed in OFAC are some of the most severe you face as an auto dealer.  This isn’t a rule you want to dance around and hope to avoid notice.  Failure to comply with OFAC can put you out of business permanently. Criminal penalties include 30 years in jail and/or $1,000,000.00 per violation.  Individual’s who violate the OFAC requirements may be subject to a maximum of $5,000,000 in fines.  Corporations may be subject to a maximum of $10,000,000.00 in fines.

WHAT IF I RUN A CUSTOMER AGAINST OFAC AND THEIR NAME APPEARS?

If you run the customer against OFAC and get a match be prepared to take the following steps.  First, verify that you are in fact using OFAC’s current list from the Department of Treasury’s own website; many websites host incomplete or out of date OFAC data. Next, evaluate the accuracy of the information you receive from OFAC’s site – how close is the match, is the name spelled differently, is the nationality and address correct?  Get more information from the customer if necessary so that you can better assess the accuracy of the match.  If there are lots of similarities between what you see on OFAC and the information provided by the customer you most stop the transaction and file a report within 10 business days following the date of the blocked transaction.

HOW DO I REPORT A MATCH?

If you are calling about a wire transfer or other “live” transaction:

Step 1. Is the “hit” or “match” against OFAC’s SDN list or targeted countries, or is it “hitting” for some other reason (i.e., “Control List” or “PEP,” “CIA,” “Non-Cooperative Countries and Territories,” “Canadian Consolidated List (OSFI),” “World Bank Debarred Parties,” “Blocked Officials File,” or “government official of a designated country”), or can you not tell what the “hit” is?

  • If it’s hitting against OFAC’s SDN list or targeted countries, continue to 2 below.
  • If it’s hitting for some other reason, you should contact the “keeper” of whichever other list the match is hitting against. For questions about:
  • The Denied Persons List and the Entities List, please contact the Bureau of Industry and Security at the U.S. Department of Commerce at 202-482-4811.
  • The FBI’s Most Wanted List or any other FBI-issued watch list, please contact the Federal Bureau of Investigation (http://www.fbi.gov/contact/fo/fo.htm).
  • The Debarred Parties list, please contact the Office of Defense Trade Controls at the U.S. Department of State, 202-663-2700.
  • The Bank Secrecy Act and the USA PATRIOT Act, please contact the Financial Crimes Enforcement Network (FinCEN), 1-800-949-2732.
  • If you are unsure whom to contact, please contact your interdict software provider which told you there was a “hit.”
  • If you can’t tell what the “hit” is, you should contact your interdict software provider which told you there was a “hit.”

Step 2. Now that you’ve established that the hit is against OFAC’s SDN list or targeted countries, you must evaluate the quality of the hit. Compare the name in your transactions with the name on the SDN list. Is the name in your transaction an inpidual while the name on the SDN list is a vessel, organization or company (or vice-versa)?

  • If yes, you do not have a valid match.*
  • If no, please continue to 3 below.

Step 3. How much of the SDN’s name is matching against the name in your transaction? Is just one of two or more names matching (i.e., just the last name)?

  • If yes, you do not have a valid match.*
  • If no, please continue to 4 below.

Step 4. Compare the complete SDN entry with all of the information you have on the matching name in your transaction. An SDN entry often will have, for example, a full name, address, nationality, passport, tax ID or cedula number, place of birth, date of birth, former names and aliases. Are you missing a lot of this information for the name in your transaction?

  • If yes, go back and get more information and then compare your complete information against the SDN entry.
  • If no, please continue to 5 below.

Step 5. Are there a number of similarities or exact matches?

  • If yes, please call the hotline at 1-800-540-6322.
  • If no, you do not have a valid match.*

If you are calling about an account:

Step 1. Is the “hit” or “match” against OFAC’s SDN list or targeted countries, or is it “hitting” for some other reason (i.e., “Control List” or “PEP,” “CIA,” “Non-Cooperative Countries and Territories,” “Canadian Consolidated List (OSFI),” “World Bank Debarred Parties,” or “government official of a designated country”), or can you not tell what the “hit” is?

  • If it’s hitting against OFAC’s SDN list or targeted countries, continue to 2 below.
  • If it’s hitting for some other reason, you should contact the “keeper” of whichever other list the match is hitting against. For questions about:
  • The Denied Persons List and the Entities List, please contact the Bureau of Industry and Security at the U.S. Department of Commerce at 202-482-4811.
  • The FBI’s Most Wanted List or any other FBI-issued watch list, please contact the Federal Bureau of Investigation (http://www.fbi.gov/contact/fo/fo.htm).
  • The Debarred Parties list, please contact the Office of Defense Trade Controls at the U.S. Department of State, 202-663-2700.
  • The Bank Secrecy Act and the USA PATRIOT Act, please contact the Financial Crimes Enforcement Network (FinCEN), 1-800-949-2732.
  • If you are unsure whom to contact, you should contact your interdict software provider which told you there was a “hit.”
  • If you can’t tell what the “hit” is, you should contact your interdict software provider which told you there was a “hit.”

Step 2. Now that you’ve established that the hit is against OFAC’s SDN list or targeted countries, you must evaluate the quality of the hit. Compare the name of your account holder with the name on the SDN list. Is the name of your account holder an individual while the name on the SDN list is a vessel, organization or company (or vice-versa)?

  • If yes, you do not have a valid match.*
  • If no, please continue to 3 below.

Step 3. How much of the SDN’s name is matching against the name of your account holder? Is just one of two or more names matching (i.e., just the last name)?

  • If yes, you do not have a valid match.*
  • If no, please continue to 4 below.

Step 4. Compare the complete SDN entry with all of the information you have on the matching name of your account holder An SDN entry often will have, for example, a full name, address, nationality, passport, tax ID or cedula number, place of birth, date of birth, former names and aliases. Are you missing a lot of this information for the name of your account holder?

  • If yes, go back and get more information and then compare your complete information against the SDN entry.
  • If no, please continue to 5 below.

Step 5. Are there a number of similarities or exact matches?

  • If yes, please call the hotline at 1-800-540-6322.
  • If no, you do not have a valid match.*

If you have reason to know or believe that processing this transfer or operating this account would violate any of the Regulations, you must call the hotline and explain this knowledge or belief.

HOW LONG SHOULD I KEEP RECORDS OF BLOCKED TRANSACTIONS?

You need to keep records of the blocked transaction for 5 years and submit an annual report of any blocked transactions as of June 30 of each year.  So setup a file in the back office, label it clearly, and make certain every one of your colleagues knows how to access the information.

BUY HERE PAY HERE DEALERS

Check your customer’s name against OFAC before accepting each payment.  Because the OFAC list is constantly changing, even if they weren’t on the list when you entered into the initial agreement, they may be now.

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