What is OFAC Screening?
OFAC screening is a subset of denied party screening that applies to organizations doing business in the United States or transacting in U.S. Dollars anywhere in the world. OFAC screening involves checking entities against the denied party lists maintained by the United States Treasury Department’s Office of Foreign Assets Control (OFAC). Additionally, OFAC compliance can also include identifying sanctions and embargoes placed on nations and political jurisdictions.
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Do all financial transactions need to be screened?
The coverage of OFAC’s export compliance regulations is fairly broad, and organizations that fall under it should take care to comply with OFAC’s sanctions, embargoes, and regulations to the best of their ability:
- If the organization is based in the U.S., it must comply with OFAC requirements;
- If the organization conducts business in the U.S., it must comply with OFAC requirements; and
- If the organization is conducting transactions in U.S. dollars, or if transactions are being processed by U.S. banks, then that transaction should be compliant with OFAC regulations
Do non-American organizations have to comply with OFAC regulations?
Organizations that conduct business in the U.S., or in U.S. Dollars, must comply with OFAC regulations, even if they are not based in the United States.
What are OFAC sanctions? How are they different from OFAC screening?
OFAC screening can colloquially be understood to apply to individuals and entities that are on OFAC’s watch lists or denied party lists. Sanctions, on the other hand, apply to entire countries, governments, or jurisdictions, and are typically employed by OFAC to further American national interests and foreign policy goals.
Put simply, OFAC screening applies to an individual; OFAC sanctions apply to a country or a government. In the latter case, business and trade may be forbidden or at least restricted even if the individual persons or entities concerned do not appear on OFAC’s lists themselves.Having an OFAC screening tool, such as Descartes’ Visual Compliance, can help maximize compliance with both OFAC sanctions and screening.
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