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June 20, 2002
OFAC Civil Penalties -- A New Proposal
by Mary Beth Guard
Haven't ever written a comment letter on a proposed regulation? Here's your chance, and there are plenty of reasons to get involved.

In all the presentations I've given on OFAC compliance, some of the questions that invariably come up are:
  • How great is our risk?
  • Are these drug traffickers, terrorists, and the like really stupid enough to try to do a transaction with a financial institution after their name appears on the OFAC list?
  • How often does OFAC take enforcement action against a financial institution?
  • Since the OFAC requirements apply to all individuals and businesses in the U.S., and not just financial institutions, do our customers really have a risk of violations?
  • If we make a risk management decision (for example, deciding not to check the names of noncustomer payees of checks against the OFAC list when the payee brings a check in to be paid across the counter) is that something OFAC might catch?
  • What are the most common OFAC violations?
OFAC has published a proposed rule and request for comments. In it, OFAC expresses its desire to make enforcement activities more transparent to the public by making publicly available certain civil penalties information. OFAC believes that will promote greater awareness of its enforcement activities and encourage compliance with the economic sanctions programs.

OFAC would make available the following information, no less than quarterly, about proceedings that result in either civil money penalties or informal settlements:
  1. the name of the entity involved
  2. the sanctions program involved
  3. a brief description of the violation or alleged violation; and
  4. the amount of the agreed settlement
OFAC would not divulge information regarding pending proceedings, nor would they include information relating to the Foreign Narcotics Kingpin Sanctions Regulations, trade secrets and other sensitive commercial or financial information.

Tell them what you think. Good idea? Bad idea? Good basic concept, but you believe it would be sufficient to simply note the type of entity against whom the enforcement action was taken (such as manufacturing corporation, savings bank, commercial bank, check cashing business, oil company, etc.), rather than disclosing the name of the entity. Put your own spin on your letter. Tell them how this would impact your institution.

The deadline for submitting comments is July 19, 2002. The address to send them to is:

Chief of Records,
ATTN: Request for Comments, OFAC
Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220

You may fax your comment letter to 202-622-1657.

Or you may submit it via OFAC's Web site.

We're writing ours now!

First published on BankersOnline.com 5/31/02


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