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Differences Between OFAC Lists and Section 314(a) Lists

by John S. Burnett, BOL Guru

"Checking lists" has become a standard entry on many job descriptions for bank officers and employees, whether they work in Operations, Lending, Trust, Investments, Security or, well, almost anywhere. Many bank employees have a list of lists to check, and government lists are ranked high on each of them.

Perhaps because of the areas in which Treasury's Office of Foreign Assets Control (OFAC), the USA PATRIOT Act and BSA/AML efforts intersect, we often see misunderstandings concerning two particular government lists -- those commonly known as the "OFAC List" and the "314(a) List." We've created this chart to help sort out the differences.

314(a) List OFAC List Highly sensitive and confidential. Disseminated only to a small select group and subject to the utmost confidentiality. Public list of names. Available over the Internet to anyone Persons on this list are subjects of law enforcement investigations. You should not infer from the fact they are listed that they have been convicted of a crime. Persons and entities on this list have been publicly named as persons against whom there are sanctions imposed by the U.S. government. Names on the 314(a) List are usually not on the OFAC list and vice versa. Names on the OFAC List are usually not on the 314(a) list and vice versa. Consists of entities and individuals identified by federal or other law enforcement authorities and provided to the banking regulators for confidential dissemination to banks. Consists of individuals and entities that are subject to the sanctions programs of the Office of Foreign Assets Control. This list used to be sent by email or fax to designated individuals at each institution. In place of the email method, the list is now downloaded by authorized individuals at each institution from a secure server maintained by FinCEN. FinCEN is able to determine when each institution completes a download of the list. Some institutions still receive the list via fax. Each financial institution must take responsibility for monitoring the list and determining if changes have occurred. The institution must obtain the list itself, on its own initiative, either directly from the OFAC site or from a third-party. Institutions are asked to review their records for the most recent 12 months (6 months for wire transfer records), including, but not necessarily limited to, account files, wire and book transfer records, monetary instrument sales records, credit card records, electronically searchable safe deposit box records, trust department records, documentation for loans and mortgages, and certain other records to determine whether there are any records indicating transactions or relationships involving anyone on the 314(a) List. Some requests may ask that the search cover a longer period. The OFAC list requires a "snapshot in time" search to determine if, at the time new names/entities are added to the list, the institution is holding any assets of the OFAC-affected parties. In addition, all institutions must consult the list on an ongoing basis when entering into new transactions to determine if a party to the transaction is on the list. If an institution determines it has a match in its records for anyone on the current 314(a) list, mark an "X" next to the party on the list, and email or fax it back to FinCEN, per their instructions.

You are also asked to include: the name, address, telephone number, fax number and email address of the individual (or individuals) at your institution who are authorized to accept service of the subpoena. If an institution determines it has a "hit" on the OFAC list, it must determine if the entity/individual is subject to having its transactions rejected or having its assets blocked. The institution should call OFAC to verify the hit is not a false positive, then either block or reject (whichever the applicable sanction requires), and file a report of blocking or rejecting within 10 business days with OFAC. An institution is prohibited from notifying any individual or entity on the 314(a) List that it is on the list. It is permissible to reveal that the customer is on the OFAC list (it's a public list). You may tell the customer that is the reason the assets were blocked or the transaction was rejected. If you identify an account or relationship with a name that appears on the 314(a) List, you are NOT required to close or block the account or terminate the relationship (unless otherwise noted in the information request). If you have an account held by an individual/entity who becomes subject to blocking, you must block the account and place the assets in a separate interest-bearing account. If you are asked to engage in a transaction with an individual/entity with whom transactions are prohibited under the OFAC rules, you must reject the transaction. Use of each 314(a) list is a "one time" event. Unless notified to the contrary, the list should not be used for evaluating whether to open an account or conduct a transaction. Because it is against the law for an institution to transact business with parties on the OFAC list, most institutions check the list before each new customer relationship; many check updates to the list against their current customer bases; most check at least all higher-risk transactions against the list. If law enforcement authorities want additional information relating to accounts or relationships you have with entities or individuals named on the list, they will arrange for a subpoena or other legal request to be issued to your institution. If an Administrative Summons is issued, the institution must obtain a certificate of compliance with the Right to Financial Privacy Act before disclosing a customer's records. In limited cases, you may receive a National Security Letter, which will require you to provide the requested information without being subject to the RFPA. A full and accurate record of OFAC-affected property or transactions must be kept for five years and must be made available to OFAC upon request. If activity relating to the person or entity on the list is suspicious, you must also file an SAR if applicable dollar amount triggers are involved. Base your determination of whether activity is suspicious not on the 314(a) listing, but on the activity or behavior of the individual or entity that you are able to observe. You do not need to file a SAR simply because an individual or entity is on the OFAC list. If you are aware of suspicious activity involving the entity/individual and your bank, however, a SAR would be required. First published on 4/13/06; updated 9/13/10 to remove reference to 314(a) reference to ACH transaction records.

First published on 09/13/2010

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