Efforts to control terrorist activity have increased since September 11, 2001, and OFAC compliance has played a role in that. The Office of Foreign Assets Control is focused on denying terrorist groups access to the international financial system and impairing their ability to raise funds. All financial institutions must now take steps to assure OFAC compliance.

Necessity of OFAC Compliance

OFAC is authorized to control transactions and freeze foreign assets under U.S. jurisdiction. They work under the guidelines of the United Nations and cooperate with allied governments. This makes it imperative for businesses and financial institutions to understand and implement OFAC compliance. This includes written policies and procedures, a training program, and a way to test effectiveness.

The Specially Designated Nationals and Blocked Persons List contain names of persons identified as posing a threat to the United States. OFAC publishes and distributes this list bi-weekly. Financial institutions must check their account databases against this list and report any matches. The OFAC Blocked Countries List is distributed to businesses to alert and warn them against doing business with blocked countries. Guidelines are provided to deal with individual requirements for each country.

OFAC compliance presents challenges. Manual compliance could be costly and time-consuming. Automated systems have more advantages. A variety of software solutions are available to meet every need. These systems will routinely check lists against databases and notify of any matches. They also control false positives and provide 24-hour implementation.