Financial Industry Regulatory Authority (“FINRA”) provides an OFAC search tool that many industry member firm’s use as part of their onboarding process for risk-based background reviews. As of January 3, 2023, FINRA’s OFAC search tool will be retired. We recommend that you notify all staff that normally do OFAC checks for your Firm so they can become familiar with the OFAC tool available through the United States Department of Treasury.
What is OFAC?
The Office of Foreign Assets Control (OFAC) is the government agency that maintains the OFAC list. The OFAC list is a publicly available list and is made up of several subset lists which contain the names of foreign individuals and entities that our government has specified as illegal for U.S. citizens or companies to conduct business with. The Office of Foreign Assets Control administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. [09-10-02]
What is the OFAC Tool?
The United States Department of Treasury’s free OFAC tool assists the public in complying with sanctions programs by facilitating the use of the Specially Designated Nationals and Blocked Persons list (the “SDN List”) and other sanctions lists administered by OFAC. The OFAC tool incorporates features that enable comprehensive searching on a user-friendly platform, including a “Minimum Name Score” function that permits users to set a threshold (i.e., a fuzziness rating) for the closeness of any potential match to a user’s search. This function can detect certain misspellings or other incorrectly entered text, and will return near, or proximate matches based on the confidence rating set by the user. The OFAC search tool does not permit batch searches and should not be used by automated systems that are configured to continually run searches.
What is Required?
While OFAC regulations do not require that you perform name searches against the list, regulatory authorities will generally find your BSA program to be deficient if you do not have a program for mitigating the risk of doing business with an entity on the OFAC list. U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S.-origin goods to comply.
How Do I Access the New Link and More Information?
For additional information regarding the OFAC search tool, please see the guidance posted by OFAC on its sanctions list search website and in its Frequently Asked Questions regarding the tool. Please contact OFAC if you have questions about the search tool that are not addressed on these pages.
