tlm724
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Join date : 2012-01-01
Location : Vermont
Thank you emmaduke !! Here is info about OFAC and the last paragraph is telling 
Bank Secrecy Act
Anti-Money Laundering
Examination Manual
Backward | Table of Contents | Forward
Office of Foreign Assets Control—Overview
Objective. Assess the bank’s risk-based Office of Foreign Assets Control (OFAC) compliance program to evaluate whether it is appropriate for the bank’s OFAC risk, taking into consideration its products, services, customers, entities, transactions, and geographic locations.
OFAC is an office of the U.S. Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted individuals and entities such as foreign countries, regimes, terrorists, international narcotics traffickers, and those engaged in certain activities such as the proliferation of weapons of mass destruction or transnational organized crime.
OFAC acts under Presidential wartime and national emergency powers, as well as various authorities granted by specific legislation, to impose controls on transactions and to freeze assets under U.S. jurisdiction. OFAC has been delegated responsibility by the Secretary of the Treasury for developing, promulgating, and administering U.S. sanctions programs.148 Many of these sanctions are based on United Nations and other international mandates; therefore, they are multilateral in scope, and involve close cooperation with allied governments. Other sanctions are specific to the national security interests of the United States.
On November 9, 2009, OFAC issued a final rule entitled "Economic Sanctions Enforcement Guidelines" in order to provide guidance to persons subject to its regulations. The document explains the procedures that OFAC follows in determining the appropriate enforcement response to apparent violations of its regulations. Some enforcement responses may result in the issuance of a civil penalty that, depending on the sanctions program affected, may be as much as $250,000 per violation or twice the amount of a transaction, whichever is greater. The Guidelines outline the various factors that OFAC takes into account when making enforcement determinations, including the adequacy of a compliance program in place within an institution to ensure compliance with OFAC regulations.149
All U.S. persons,150 including U.S. banks, bank holding companies, and nonbank subsidiaries, must comply with OFAC's regulations.151 The federal banking agencies evaluate OFAC compliance programs to ensure that all banks subject to their supervision comply with the sanctions.152 Unlike the BSA, the laws and OFAC-issued regulations apply not only to U.S. banks, their domestic branches, agencies, and international banking facilities, but also to their foreign branches, and often overseas offices and subsidiaries. OFAC encourages banks to take a risk-based approach to designing and implementing an OFAC compliance program. In general, the regulations that OFAC administers require banks to do the following:
Block accounts and other property of specified countries, entities, and individuals.
Prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals.
Blocked Transactions
U.S. law requires that assets and accounts of an OFAC-specified country, entity, or individual be blocked when such property is located in the United States, is held by U.S. individuals or entities, or comes into the possession or control of U.S. individuals or entities. For example, if a funds transfer comes from offshore and is being routed through a U.S. bank to an offshore bank, and there is an OFAC-designated party to the transaction, it must be blocked. The definition of assets and property is broad and is specifically defined within each sanction program. Assets and property includes anything of direct, indirect, present, future, or contingent value (including all types of bank transactions). Banks must block transactions that:
Are by or on behalf of a blocked individual or entity;
Are to or go through a blocked entity; or
Are in connection with a transaction in which a blocked individual or entity has an interest.
For example, if a U.S. bank receives instructions to make a funds transfer payment that falls into one of these categories, it must execute the payment order and place the funds into a blocked account.153 A payment order cannot be canceled or amended after it is received by a U.S. bank in the absence of an authorization from OFAC.
Prohibited Transactions
In some cases, an underlying transaction may be prohibited, but there is no blockable interest in the transaction (i.e., the transaction should not be accepted, but there is no OFAC requirement to block the assets). In these cases, the transaction is simply rejected, (i.e., not processed). For example, the Sudanese Sanctions Regulations prohibit transactions in support of commercial activities in Sudan. Therefore, a U.S. bank would have to reject a funds transfer between two companies, which are not Specially Designated Nationals or Blocked Persons (SDN), involving an export to a company in Sudan that also is not an SDN. Because the Sudanese Sanctions Regulations would only require blocking transactions with the Government of Sudan or an SDN, there would be no blockable interest in the funds between the two companies. However, because the transactions would constitute the exportation of services to Sudan, which is prohibited, the U.S. bank cannot process the transaction and would simply reject the transaction.
It is important to note that the OFAC regime specifying prohibitions against certain countries, entities, and individuals is separate and distinct from the provision within the BSA's CIP regulation (31 CFR 1020.220(a)(4)) that requires banks to compare new accounts against government lists of known or suspected terrorists or terrorist organizations within a reasonable period of time after the account is opened. OFAC lists have not been designated government lists for purposes of the CIP rule. Refer to the core overview section, "Customer Identification Program," page 47, for further guidance. However, OFAC's requirements stem from other statutes not limited to terrorism, and OFAC sanctions apply to transactions, in addition to account relationships.
OFAC Licenses
OFAC has the authority, through a licensing process, to permit certain transactions that would otherwise be prohibited under its regulations. OFAC can issue a license to engage in an otherwise prohibited transaction when it determines that the transaction does not undermine the U.S. policy objectives of the particular sanctions program, or is otherwise justified by U.S. national security or foreign policy objectives. OFAC can also promulgate general licenses, which authorize categories of transactions, such as allowing reasonable service charges on blocked accounts, without the need for case-by-case authorization from OFAC. These licenses can be found in the regulations for each sanctions program (31 CFR, Chapter V (Regulations)) and may be accessed from OFAC’s Web site. Before processing transactions that may be covered under a general license, banks should verify that such transactions meet the relevant criteria of the general license.154
Specific licenses are issued on a case-by-case basis.155 A specific license is a written document issued by OFAC authorizing a particular transaction or set of transactions generally limited to a specified time period. To receive a specific license, the person or entity who would like to undertake the transaction must submit an application to OFAC. If the transaction conforms to OFAC's internal licensing policies and U.S. foreign policy objectives, the license generally is issued. If a bank's customer claims to have a specific license, the bank should verify that the transaction conforms to the terms and conditions of the license (including the effective dates of the license), and may wish to obtain and retain a copy of the authorizing license for recordkeeping purposes.
OFAC Reporting
Banks must report all blockings to OFAC within 10 business days of the occurrence and annually by September 30 concerning those assets blocked (as of June 30).156 Once assets or funds are blocked, they should be placed in a separate blocked account. Prohibited transactions that are rejected must also be reported to OFAC within 10 business days of the occurrence.157
Banks must keep a full and accurate record of each rejected transaction for at least five years after the date of the transaction. For blocked property (including blocked transactions), records must be maintained for the period the property is blocked and for five years after the date the property is unblocked.
Additional information concerning OFAC regulations, such as Sanctions Program and Country Summaries brochures; the SDN and other lists, including both entities and individuals; recent OFAC actions; and "Frequently Asked Questions," can be found on OFAC’s Web site.158
OFAC Compliance Program
While not required by specific regulation, but as a matter of sound banking practice and in order to mitigate the risk of noncompliance with OFAC requirements, banks should establish and maintain an effective, written OFAC compliance program that is commensurate with their OFAC risk profile (based on products, services, customers, and geographic locations). The program should identify higher-risk areas, provide for appropriate internal controls for screening and reporting, establish independent testing for compliance, designate a bank employee or employees as responsible for OFAC compliance, and create training programs for appropriate personnel in all relevant areas of the bank.
http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_037.htm
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