OFAC and property sellers

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... We sit here and enter known local entities day after day, when OFAC is the Office of FOREIGN Asset Control, and you know that your local Title Company is not on the list and never will be because Uncle Joe up the road owns the company....

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Not to make too fine a point of it, but the actual name is Office of Foreign Assets (plural) Control.

You do have to know a little bit of history to understand why that is. If you want to laugh instead become aggravated, just remember that the predecessor organization was called the Office of Alien Property. Should the saucers land, maybe it will be called that again .

The reason you're checking Joe's title company, even though he's been up the street for years, is that, even though he's good old Joe, always gets his coffee over at Ozzie's before opening up the office, he gives 30% of his income to Sinn Fein. Or, his company seems to own a marijuana field in the Russian steppes the size of Rhode Island...Or, just other stuff you wouldn't necessarily know about.

If you want to be annoyed about OFAC scanning, you should be annoyed that the Executive Order transformed you into a junior G-Man and you didn't get the cool decoder ring to go with it.

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....It seems the OTS is the one agency pressing the hardest to require its institutions to check the seller in a real estate transaction. Of course, why they don't then require the bank to check the seller in all purchase money lending transactions (such as auto purchase loans) is beyond me.

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Even if the seller is on the OFAC list, the bank making a loan to Jim Bedsole who is not on the list is not a violation of OFAC. Even if the bank knows that Jim is going to take the money and turn around and buy 40 acres of prime real estate in Kabul from Osama bin Laden, has the bank violated OFAC? I don't think so. Jim certainly has violated OFAC if he does this. You could even make a case that the attorney closing the loan and issuing the proceeds check to Osama violated OFAC. But it think it is a real stretch to say the bank violated OFAC.

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What if the seller is on the list under a sanctions program that requires blocking of assets. If the bank makes the loan did it ever have in its possession any assets of the SDN to block? In making the loan did the bank release any assets of the SDN? If the answer to those questions are no, then no violation occurs.

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I think you're venturing out where the buses don't run. If the property owner is a match under a program that requires blocking of assets, why would you lend money to someone for the purchase of property of which they cannot take possession. Do you lend money for property where clear title cannot be established?

By refusing the loan, you've 'blocked' the asset as best you can. You've not allowed it to be transferred or coverted to cash. If you make the loan, under your theory, you've facilitated the transfer of the asset, and put cash in the hand of an SDN, and have a customer that owes you money, but cannot take possession of the property they think they bought. Nice day's work.

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It seems to me that there are a lot of other areas where banks are not checking names that have a higher potential of an actual OFAC violation occurring than with the seller of real estate. That's whee the OTS should be focusing its efforts.

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"Don't do business with..." doesn't have a lot of gray area to it. Banks, and every other kind of business in the US, has to do their own risk assessment, model their potential for OFAC violation, and take appropriate steps. My impression of Treasury's approach (in a previous life, I worked OFAC compliance for an insurance company), is that they've done their own assessment of the industries/sectors at greatest risk for OFAC violation. They started at the top of that list and are marching their way down. Personally, I think supermarket customer loyalty cards/programs are a pretty damn smart preparation for retail sales OFAC compliance.

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The reason you're checking Joe's title company, even though he's been up the street for years, is that, even though he's good old Joe, always gets his coffee over at Ozzie's before opening up the office, he gives 30% of his income to Sinn Fein. Or, his company seems to own a marijuana field in the Russian steppes the size of Rhode Island...Or, just other stuff you wouldn't necessarily know about.

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The reason you're checking Joe's title company, even though he's been up the street for years, is that, even though he's good old Joe, always gets his coffee over at Ozzie's before opening up the office, he gives 30% of his income to Sinn Fein. Or, his company seems to own a marijuana field in the Russian steppes the size of Rhode Island...Or, just other stuff you wouldn't necessarily know about.

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Joe supporting Sinn Fein or owning a marijuana field in the Russian Steppes is not something that I should be expected to know or discover - and since Joe is an American he is not going to be on the OFAC list!
I am a Banker - not IRS, ICE, FBI, or Homeland Security.

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I'm sort of flummoxed at your assertion that Joe won't be on the list because Joe's an American. Why would that stop Treasury from adding his name to the list?

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Well Anon - I think it is because it is called the Office of FORIEGN Assets Control - can you say duh?. You know, you should really read what you post occassionally. Your logic is a little flawed

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Perhaps not as flawed as your spelling.

I will grant that I've 'disconnected' the name of the office from the maintenance of a SDN, SDGT, Narco-trafficking, CTF watchlist. Joe sends stunningly huge amounts of money annually to Sinn Fein or Hezbollah. You're suggesting that his US citizenship would somehow prevent Treasury from adding his name to the watchlist? How?