The Office of Foreign Assets Control, or OFAC, oversees financial activities and U.S. dollar transactions with the goal of national security and foreign policy enforcement in mind. It operates as part of the U.S. Department of the Treasury.

All incorporated entities in the United States, along with their foreign branches and subsidiaries, must follow OFAC compliance diligently. That means screening against OFAC sanctions lists. Let’s talk about OFAC and why it matters to the healthcare industry.

What’s the History of OFAC?

Foreign policy sanctions have been around for centuries now, dating back to the War of 1812 against Great Britain. However, OFAC itself was created in the 1950s in response to the Korean War, when the U.S. barred interactions with entities from North Korea and China. OFAC was largely a low-profile agency for most of its life until the 9/11 attacks, after which it suddenly hit the public spotlight as a major player in the War on Terror.

Since then, the agency is responsible for banning certain individuals and corporate entities under a myriad of sanctions programs. Some OFAC sanctions are “list-based,” such as those named on the Specially Designated Nationals and Blocked Persons List, who are known to be associated with terrorism, trafficking, and other threats to national security. There are also “country-based” sanctions covering entire regions, like the economic embargoes against Iran and North Korea.

Why Should Hospitals Care About OFAC Sanctions Lists?

OFAC sanctions lists are more of a general regulation that impacts companies of all industries, not just healthcare-related ones. However, screening for OFAC exclusions is still an important task for medical institutions to implement for several reasons:

  • Legal compliance: OFAC considers the entities on its list dangerous or risky to work with, as many of the individuals and groups mentioned can range from terrorists to narcotics traffickers.
  • Patient protection: Because of the high risk of these groups, partnering with them can compromise the effectiveness or safety of your treatments, thereby endangering your patients.
  • History of enforcement: OFAC has been seen enacting enforcement actions on the healthcare industry before as well. It’s definitely not exclusive to financial institutions as many believe.

And given how much easier restricted party screening is to implement now thanks to third-party services, there’s no reason not to get started. The biggest benefits, aside from meeting screening requirements, are that compliance facilitates the delivery of quality products and services (satisfied customers) and enables growth (strengthened bottom line).

What Does OFAC Screening Entail?

OFAC sanctions list screening is an important piece of the compliance puzzle, consisting of a number of different lists including:

  • Consolidated Sanctions List
  • Foreign Sanctions Evaders List
  • List of Persons Identified as Blocked Solely Pursuant to E.O. 13599
  • Non-SDN Iran Sanctions Act List
  • Specially Designated Nationals and Blocked Persons List (SDN)

Also, take a look at all of the OFAC sanctions programs for a rundown on the international trade restrictions that you must follow on a country-by-country basis.

Because these lists are updated regularly, sometimes weekly or daily, medical institutions should make it a policy to cross-check the lists on an ongoing basis to ensure consistent compliance. Regular screening programs are common in the industry for this reason.

It’s worth noting that there are exceptions involved. OFAC sometimes issues General or Specific Licenses for allowing certain interactions otherwise banned by law. Specific Licenses cover specific entities and allow for a certain type of transaction. They’re also decided upon at the discretion of OFAC on a case-by-case basis.

For more comprehensive information about effective compliance in the healthcare industry, download our white paper or visit our Resource Center.

Getting on Top of OFAC Sanctions Lists Requirements with Descartes

OFAC has been enforcing its sanctions lists rules and regulations for decades. This level of activity emphasizes the need for denied party screening.

Hospitals especially must pay attention, as they hire many physicians and medical professionals regularly and work with distributors and suppliers in many regions of the world. Screening your interactions with the OFAC list, as well as other exclusion lists, is the best way to avoid costly penalties and fines.

Get in contact with Descartes if you’re looking for industry-specific regulatory compliance and denied party screening solutions for your medical institution.

With features like automated and integrated denied party screening (that includes healthcare watchlists like the OFAC sanctions lists), compliance management workflows, and export document management, Descartes is a provider of an industry-leading suite of denied party screening, 3rd party risk management solutions, as well as trade content for leading business systems, that can be integrated with minimal disruption.

Descartes Visual Compliance and Descartes MK Denied Party Screening solutions are flexible and modular, allowing organizations to pick the specific and exact functionality and content they need for their particular compliance needs and scale up later as and when necessary.

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Written by Jackson Wood

Director, Industry Strategy, Global Trade Intelligence, Descartes