What is ofac

What Are Sanctions? Sanctioned Countries: Syria Read more. Sanctioned Countries: Cuba Read more. Sanctioned Countries: Iran Read more. What Is A Sanctions List? UN Sanctions List Read more. EU Sanctions Read more. Request a Demo. Stay ahead of Financial Crime. Most other items should be reported through usual channels within ten days of the occurrence.

The policies, procedures, and processes should also address the management of blocked accounts. Banks are responsible for tracking the amount of blocked funds, the ownership of those funds, and interest paid on those funds. Total amounts blocked, including interest, must be reported to OFAC by September 30 of each year information as of June When a bank acquires or merges with another bank, both banks should take into consideration the need to review and maintain such records and information.

Banks no longer need to file SARs based solely on blocked narcotics- or terrorism-related transactions, as long as the bank files the required blocking report with OFAC. However, because blocking reports require only limited information, if the bank is in possession of additional information not included on the OFAC blocking report , a separate SAR should be filed with FinCEN that would include such information.

Maintaining license information. This will allow the bank to verify whether a customer is initiating a legal transaction. Banks should also be aware of the expiration date on the OFAC license.

If it is unclear whether a particular transaction would be authorized under the terms of the license, the bank should contact OFAC. Maintaining copies of OFAC licenses will also be useful if another bank in the payment chain requests verification of a license's validity.

Copies of OFAC licenses should be maintained for five years, following the most recent transaction conducted in accordance with the license. Every bank should conduct an independent test of its OFAC compliance program that is performed by the internal audit department, outside auditors, consultants, or other qualified independent parties.

For large banks, the frequency and area of the independent test should be based on the known or perceived risk of specific business areas. The person s responsible for testing should conduct an objective, comprehensive evaluation of OFAC policies, procedures, and processes. It is recommended that every bank designate a qualified individual s to be responsible for the day-to-day compliance of the OFAC compliance program, including changes or updates to the various sanctions programs, and the reporting of blocked or rejected transactions to OFAC and the oversight of blocked funds.

The bank should provide adequate training for all appropriate employees on its OFAC compliance program, procedures and processes. The scope and frequency of the training should be consistent with the bank's OFAC risk profile and appropriate to employee responsibilities. In general, the regulations that OFAC administers require banks to do the following: Block accounts and other property of specified countries, entities, and individuals.

Prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals. Blocked Transactions U. Banks must block transactions that: Are by or on behalf of a blocked individual or entity; Are to or go through a blocked entity; or Are in connection with a transaction in which a blocked individual or entity has an interest. Prohibited Transactions In some cases, an underlying transaction may be prohibited, but there is no blockable interest in the transaction i.

OFAC Licenses OFAC has the authority, through a licensing process, to permit certain transactions that would otherwise be prohibited under its regulations. OFAC Compliance Program While not required by specific regulation, but as a matter of sound banking practice and in order to mitigate the risk of noncompliance with OFAC requirements, banks should establish and maintain an effective, written OFAC compliance program that is commensurate with their OFAC risk profile based on products, services, customers, and geographic locations.

Although not an exhaustive list, examples of products, services, customers, and geographic locations that may carry a higher level of OFAC risk include: International funds transfers. Nonresident alien accounts. Foreign customer accounts. Cross-border automated clearing house ACH transactions. Commercial letters of credit and other trade finance products.

Transactional electronic banking. Foreign correspondent bank accounts. Payable through accounts. Concentration accounts. International private banking. Overseas branches or subsidiaries.

Internal Controls An effective OFAC compliance program should include internal controls for identifying suspect accounts and transactions, as well as reporting blocked and rejected transactions to OFAC. Internal controls should include the following elements: Identifying and reviewing suspect transactions.

Independent Testing Every bank should conduct an independent test of its OFAC compliance program that is performed by the internal audit department, outside auditors, consultants, or other qualified independent parties. Responsible Individual It is recommended that every bank designate a qualified individual s to be responsible for the day-to-day compliance of the OFAC compliance program, including changes or updates to the various sanctions programs, and the reporting of blocked or rejected transactions to OFAC and the oversight of blocked funds.

Training The bank should provide adequate training for all appropriate employees on its OFAC compliance program, procedures and processes. Persons e. Persons from engaging in virtually all trade and financial transactions involving the following countries and regions:.

These countries are:. In addition to countries, the U. In addition, the U. These secondary sanctions vary widely by sanctions program and activity. The U.