OFAC (Office of Foreign Assets Control)
The US Treasury office that enforces economic and trade sanctions, including the list of people and companies US persons generally may not deal with.
What OFAC is
The Office of Foreign Assets Control (OFAC) is part of the US Treasury. It administers and enforces sanctions against countries, regimes, terrorists, drug traffickers and other threats. A central tool is the Specially Designated Nationals (SDN) list. US persons must block property in which a listed person has an interest and generally may not deal with them.
How it works
Banks and fintechs screen customers during know your customer (KYC) and know your business (KYB) checks. They also screen incoming and outgoing payments, such as wire transfers. A true match is blocked or rejected and reported to OFAC. OFAC rules are separate from the Bank Secrecy Act.
- 01 · SCREEN Names, addresses and payment parties are checked against OFAC's sanctions lists.
- 02 · REVIEW Potential matches are reviewed to rule out false positives.
- 03 · REPORT True matches are blocked or rejected and reported to OFAC within 10 business days.
| Action | When it applies | Report to OFAC |
|---|---|---|
| Block | A blocked person, or an entity 50% or more owned by blocked persons, has an interest in it | Within 10 business days |
| Reject | The transaction is prohibited, but no blocked person has an interest in it | Within 10 business days |
| Annual report | Blocked property held as of June 30 | By September 30 each year |
OFAC can issue licenses that allow transactions that would otherwise be prohibited.
Who must comply
- US citizens and permanent residents, wherever they are
- Companies organized in the US, including their foreign branches
- Anyone physically in the United States
- Foreign subsidiaries of US companies, under certain programs such as Cuba and Iran
Cross River runs OFAC screening automatically on wires before Federal Reserve processing. It also scans international ACH payments, and its anti-money laundering team reviews any resulting holds. See how Cross River approaches compliance.