OFAC Sanctions List

Most people don’t think much about the Office of Foreign Asset Control (OFAC) or the list of Specially Designated Nationals and Blocked Persons (SDN) list, better known simply as the “OFAC list”. The Office of Foreign Asset Control was formally created December of 1950, during the Korean War when President Truman declared a national emergency and blocked all Chinese and North Korean assets subject to US jurisdiction. As a result, the Treasury Department created the OFAC department. While it started as a wartime necessity, it has evolved into one of the enforcement arms of the government.

These days, the OFAC sanctions list is constantly updated and contains individuals, entities (including entire countries), and organizations that US persons (businesses, citizens, and permanent residents) are legally prohibited from engaging with.

OFAC Compliance 

What does that mean? If you send money, provide goods, or do business with anyone on the list, even by accident, you can receive a heavy fine, sometimes tens of thousands of dollars. Some companies have been forced to pay millions of dollars. For instance, British American Tobacco (BAT) paid a $508 million fine to settle violations relating to sanctions on North Korea and proliferators of weapons of mass destruction.

• If you use vendors or contractors overseas, they could potentially be a front company for an individual or entity on the list.
• If you sell online, a buyer might use a foreign payment method that is linked to a sanctioned entity.
• If you sell real estate or land, an investor or buyer can use a shell company that is connected to an individual or entity on the list.
• If you handle financial transactions, your payment processor can freeze transfers tied to sanctioned names.

How to Maintain Compliance with OFAC

You need to have an OFAC screening process as a part of your vendor payment process, not only at the time of initial vendor creation in your ERP system, but also a continued effort over time, as your vendor’s status of not being on the list might change at a later date.

• Do you have a process today that you use on a regular basis?
• Does your ERP system have the ability to check new vendors upon their creation?
• Does your ERP system systematically check all payments before they are issued to ensure the vendor isn’t on the OFAC sanctions list?
• Do you have a way, if asked, to show that you have stopped any potential payments to individuals or entities on the list, and what date you first found them on the list?

In order to ensure that you stay in OFAC compliance, you should seek out a solution that will provide you the above so that you can avoid being investigated or fined in the future. That solution could be integrated to your ERP, or outside of it, but either way, you do need to protect your business.

How Source Technologies can Help 

If you are using Microsoft Dynamics BC or Acumatica as your ERP system, our Robotic Payments Automation (RPA) functionality integrates within the ERP system to provide you all of the protections above in one simple package that also does TIN matching, Address validation and payment outsourcing, which can lead to significant rebates and a ROI in terms of months rather than years!

Talk to us about OFAC compliance, RPA, and fraud protection today!