We often receive questions from credit unions regarding whether they have a genuine “hit” or “false positive” match on the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals and Blocked Persons List (“SDN List”). While interdiction software can generally spot name variations and filter out many incorrectly flagged “hits,” resolving the “gray areas” often requires direct outreach to OFAC for clarification.
So, when should you reach out to OFAC? In a nutshell, OFAC recommends the following step-by-step process in making that determination:
Step 1. Is the “hit” against the SDN List or one of OFAC’s other lists? This step is only necessary if your software screens other agencies’ lists, such as FBI or State Department-issued lists.
- If yes, continue to step 2.
- If no, contact the “keeper” of the other list the match is hitting against.
Step 2. Compare the name in your transaction(s) with the name on the sanctions list. Is the name in your transaction(s) an individual while the name on the sanctions list is an organization or company (or vice-versa)?
- If yes, you do not have a valid match.
- If no, continue to step 3.
Step 3. How much of the listed entry’s name matches against the name in your transaction? Is just one of two or more names matching (e.g., just the last name)?
- If yes, you do not have a valid match.
- If no, continue to step 4 below.
Step 4. Compare the complete sanctions list entry with all of the information you have on the matching name in your transaction. An 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, obtain additional information (if possible) and then compare the complete information against the entry.
- If no, continue to step 5.
Step 5. Are there a number of similarities or exact matches?
- If yes, contact the OFAC Compliance Hotline.
- If no, you do not have a valid match.
OFAC has announced that the agency will transition to a “single, user-friendly online platform” to receive questions from the public by January 1, 2025. OFAC will retire the hotline’s email address (OFAC_Feedback@treasury.gov) on August 16, 2024, and the telephone numbers (1-800-540-6322 and 202-622-2490) on December 31, 2024.
Note: The FFIEC BSA/AML Examination Manual recommends that institutions periodically reassess their OFAC filtering software. A high number of false hits may indicate a need to review and/or update the institution’s interdiction software settings.
What’s next? Reporting & Recordkeeping
Credit unions must report all “blockings” to OFAC within 10 business days of the occurrence and annually by September 30 concerning those assets blocked (as of June 30). Once assets or funds are blocked, they should be placed in a separate blocked account. Prohibited transactions that are rejected (e.g., incoming wire from a sanctioned country to a non-SDN) must also be reported to OFAC within 10 business days of the occurrence.
OFAC recently amended its reporting procedures to require filers to use the electronic OFAC Reporting System (ORS) for submission of initial reports of blocked property, Annual Reports of Blocked Property, and reports of rejected transactions beginning on August 8, 2024. See previous blog post: OFAC to Require Use of Electronic Reporting System (americascreditunions.org)
OFAC records must be maintained for the period the account or other property is blocked and for five years after the date the property is unblocked. Credit unions must keep a full and accurate record of each rejected transaction for at least five years after the date of the transaction.
Questions? Please reach out to the Compliance Team at compliance@americascreditunions.org.
See the resource links below for more information:
OFAC FAQ #5: How do I determine if I have a valid OFAC match?
OFAC FAQ #122: What are weak aliases (AKAs)?
FFIEC BSA/AML Examination Manual/Office of Foreign Assets Control