What is OFAC?
OFAC stands for The Office of Foreign Assets Control. It is a financial intelligence and enforcement agency in the US Department of the Treasury. More information can be found here.
What does OFAC do?
OFAC is responsible for defining, administering and enforcing economic and trade sanctions programs based on US policy and national security goals against targeted foreign countries and regimes, as well as terrorists, international narcotics traffickers, people engaged in weapons of mass destruction proliferation and other activities conceived of as threats to US national security. Many of the sanctions are based on United Nations or other international mandates and involve close cooperation with other governments. OFAC sanctions programs may overlap with those administered with other international actors.
Who must comply with OFAC regulations?
All US persons must comply with OFAC regulations, regardless of where they are located. All Kountable businesses and employees acting on behalf of Kountable businesses are considered US persons.
Kountable’s Compliance team checks the names of all businesses and individuals we work with in an OFAC screening database. Additionally, banks servicing Kountable in the US and abroad may check transaction information against OFAC or other sanctions lists. This is because the institutions themselves are required to ensure money passing through them is not destined for or originating from a sanctioned entity.
What happens when a wire is delayed?
If a wire is delayed due to reasons related to OFAC, in general Kountable’s bank will alert us about the delay and request that we clarify that the wire has nothing to do with a sanctioned entity. Reasons wires may be stopped vary greatly, and can be for something as minor as an invoice code containing an acronym that is flagged on a sanctions list.
Once the Compliance and Finance teams have responded to any questions about a wire, there is nothing more we can do to expedite payment, as it is up to the bank to resume the wire.
Can OFAC reject a payment to the supplier?
No, it would be rejected for a bank’s OFAC or other screening enforcement policy; OFAC itself would not become involved unless they were alerted to suspicious activity or a violation were to be found.
On what grounds would a payment be rejected?
Wires may be rejected because some information in the payor/payee details triggered an alarm at a financial institution involved in the payment. Financial institutions are, per US law, responsible for money they may both transmit and receive, so assume all transactions are being closely monitored.
Can you anticipate when a payment will be held up?
No, even after we have run the supplier through the OFAC lists and done our due diligence, there is no definitive way to predict a delay from the bank.