What are OFAC Checks?
The Office of Foreign Assets Control (OFAC) operates as a division within the US Department of the Treasury. This agency determines whether foreign business entities may conduct commerce with the United States. The United States bases its economic and trade sanctions on US Foreign Policy and National Security Goals. These policy frameworks protect the United States from targeted foreign countries, organizations, terrorists, international narcotics traffickers, individuals engaged in weapons of mass destruction (WMD) proliferation, and other transnational organized crime threats. Such transnational crimes, including money laundering and terrorist financing, pose significant risks to US national security, economic stability, and foreign policy objectives. Enforcement actions issued by OFAC ensure compliance with these critical regulations.
What are the OFAC Check Objectives?
The Office of Foreign Assets Control is designed to identify several targeted groups based on specific threat assessments. These groups include international narcotics traffickers, terrorists, diamond traders, national security threats, and entities involved in the rapid creation of weapons of mass destruction.
The Office of Foreign Assets Control maintains a set of countries subject to trade and asset restrictions. This list includes Afghanistan, the Balkans region, Belarus, Burma, the Central African Republic, China, the Democratic Republic of Congo, Cuba, Ethiopia, Hong Kong, Iran, Iraq, Lebanon, Libya, Mali, Nicaragua, North Korea, Russia, Somalia, Sudan, Syria, Ukraine, Venezuela, Yemen, and Zimbabwe.
OFAC monitoring extends to targeted businesses across multiple sectors. These sectors encompass credit reporting services, export and import services, money services, financial services, insurance services, legal and compliance services, non-governmental organizations, non-profit entities, and virtual currency services.
The Office of Foreign Assets Control publishes the Specially Designated Nationals and Blocked Persons List (SDN). The Specially Designated Nationals (SDN) List includes individuals and companies controlled by, acting for, or operating on behalf of targeted countries. These individuals and companies may also belong to targeted groups such as terrorists and drug traffickers that transcend specific country designations. Organizations must search OFAC databases regularly to identify these designated entities and review SDN lists for compliance purposes.
What is the OFAC Screening Process?
The Office of Foreign Assets Control screening system operates through the Sanctions List Search tool. This search tool facilitates the use of the Specially Designated Nationals and Blocked Persons List and other sanctions databases. Additional sanctions lists maintained by OFAC include the Foreign Sanctions Evaders List, the Sectoral Sanctions Identifications List, the Consolidated Sanctions List, the List of Foreign Financial Institutions Subject to Part 561, the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions, the Non-SDN Palestinian Legislative Council List, the Non-SDN Iranian Sanctions List, the Non-SDN Menu-Based Sanctions List, and the Non-SDN Communist Chinese Military Companies List.
The sanctions list search tool utilizes fuzzy logic through an approximate string-matching method. This methodology identifies potential matches between word or character strings entered into the name search field. The search application features a Minimum Name Score function. This function operates as a sliding scale designed to set the fuzziness rating or closeness of potential match results from a user's query. The search works to identify misspellings or incorrectly inputted text data. Results are calculated based on the algorithm's assessment of similarity between entered data and existing records.
