In order to carry out its duties, the Office of Foreign Assets Control (OFAC) produces the Specially Designated Nationals and Blocked Persons list – also known as the OFAC SDN list.
The OFAC SDN list represents an essential tool in the fight against money laundering and terrorist financing in the United States and around the world. It forms part of the US Treasury’s Selective Sanctions policy in which specific individuals and organizations involved in certain criminal activities are penalized, as opposed to the more comprehensive approach of sanctioning entire nations.
The Specially Designated Nationals and Blocked Persons List is updated regularly with the names of individuals, entities, and organizations deemed to be involved in a range of criminal activities. US Persons (US citizens and permanent resident aliens regardless of location, US incorporated entities and their foreign branches, and in some circumstances their subsidiaries) are prohibited from doing business with anyone on the OFAC SDN list – and should check the list to ensure they are not in breach of the law if there is any uncertainty. Businesses should conduct checks prior to establishing a relationship with the person or entity, or conducting transactions with them, and periodically throughout the relationship.
What is a Specially Designated Nationals and Blocked Persons List?
A Specially Designated Nationals and Blocked Persons, or an ‘SDN’, is an individual, entity, or organization deemed detrimental to the security of the United States. An SDN may be involved in criminal activities such as terrorism, narcotics trafficking, or weapons proliferation. Alternatively, they may be owned by, or acting on behalf of, organizations and even state-sponsors which engage in those activities.
In order to use the Specially Designated Nationals and Blocked Persons List, it’s important to understand how it works, and how you should use it when engaging with foreign business interests.
US nationals are prohibited from transactions of any kind with SDNs, and the Treasury will act to block their assets in the US. Under provisions in the Patriot Act, it is also a crime to offer ‘material support’ to terrorists and terrorist organizations on the SDN list in the form of training or similar services. The danger of breaching sanctions legislation needs to be considered beyond simply the provision of financial services.
The OFAC SDN list is publically available on the US Treasury website.
OFAC provides a search engine for the SDN list. Users may input certain parameters, including searches by country or specific sanction, in order to narrow their results.
Names returned by a search are accompanied by codes which indicate the reason why a person or organization has been included on the list: “BPI-PA”, for example, indicates that entry has been “blocked pending investigation” under the Patriot Act.
To deal with the use of aliases, search results are also accompanied by a score which indicates similarity to an inputted name. A score of ‘100’ indicates an exact match, while lower scores indicate only a potential match.
Where businesses have high volumes of clients and transactions it can be highly inefficient to individually search each potential customer or party to a relationship manually. This is magnified when considering beneficial owners and senior management of entities which may also need screening. Using an efficient screening technology can minimize the effort required while providing additional context around potential matches to deliver more accurate results and fewer false positives.
While there is no scheduled timetable, the OFAC SDN list is updated regularly. Updates to the list reflect the status of current and pending OFAC investigations, and users may look through archived changes, dating back to 1994.
The unpredictable and frequent changes to the SDN list mean businesses should look for a screening provider which maintains up to date, relevant, accurate data.
OFAC may remove names from the SDN list depending on the results of investigations, or for consistent behavior in accordance with the law. Alternatively, individuals and organizations on the list may petition OFAC for removal. In these situations, OFAC will conduct a rigorous review, and announce any changes on its ‘recent actions’ pages. All historical changes may be viewed on archived versions of the list.
If you are concerned by a name match on the SDN list, you should first simply research the result. Check whether the score indicates an exact, or only potential, match – you may need to use other details, such as location, to rule out a false positive. A screening provider which includes additional context to your search results will help resolve potential matches faster, driving efficiency through your workflow. If you remain concerned about a potential match, contact OFAC by phone or email for further verification and instructions on how to proceed.