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Compliance Corner - OFAC Clearing

Much of Compliance involves navigating rules while still serving your customers in a beneficial and efficient manner. When it comes to OFAC, there’s not much room for error. Missteps can have serious consequences. As of 10/17/2024 there have been five civil money penalties totaling $32,590,943.00¹.

When we have a new system or are trying something in our test system, my co-workers say it’s easy to tell which transactions are mine because of my OFAC clear reasons. It’s very easy to get into a routine and clear with the reasons: Not exact name match or name mismatch, but is that really the reason the OFAC alert occurred?

Let’s review some examples:

  1. A customer is paying their rent for September, October, and November and notates this in the Originator to Beneficiary information. There is a company in the SDN list of Limited Liability Company Oktyaber, and this appears in your possible OFAC matches. The actual match is from October to Oktyaber. This is not a name mismatch. A good clear reason is: False positive hit on originator to beneficiary information, not a company.
  2. A customer buys furniture at an auction. In the purpose of payment there is the notation furniture-auction. There is a company on the non-SDN entities Auction LLC. The match is auction to Auction. This is not a not exact name match. A good clear reason is: False positive hit on payment purpose, not a company.
  3. A customer is sending funds to beneficiary Daniel Smith. There is a ship on the SDN list named Daniel. Is this a not exact name match? Not really, it’s not hitting on an individual. A good clear reason is Beneficiary is an individual not a ship.
  4. Your customer is John P. Schmidt. There is a person on the SDN list of John Jacob Schmidt. The match is on John Schmidt. This is a name mismatch, but it’s better to be specific. This is your customer; do you have a DOB or SSN to compare with the information in the OFAC alert? If you are the receiving bank, are the addresses of the individuals on the same continent? Good clear reason: Name mismatch, middle name, and DOB different or Name mismatch, middle name and address different.

Examiners and auditors review clear reasons. If all the clear reasons state not exact name match, they could question if your bank is monitoring the OFAC alerts. Remember, it’s always better to tell your story then to have an examiner tell it for you.

 

  1. Civil Penalties and Enforcement Information | U.S. Department of the Treasury