What is an OFAC background check — and should I use it?


To order an OFAC background check, including a national criminal background check, please click here.


Many customers have asked us about OFAC, named for the Office of Foreign Assets Control. In this post we explore what OFAC is, what an OFAC check does, and whether it is appropriate for use in corporate employment screening.

The Office of Foreign Assets Control is part of the U. S. Treasury. It is the official body that determines whether or not an entity or individual is permitted to do business with the United States. Sanctions, first used in 1812 against Great Britain, are part of the tools used to apply financial pressure to a group. The government learned a while ago that it is easier to interfere with or track the flow of criminal funds, than to prosecute the underlying criminal activity. Witness the case of Al Capone, convicted of income tax evasion rather than murder, and the successful use of anti-racketeering laws to reduce Mafia influence.

With the events of 9/11, OFAC’s attention turned to terrorism. The desire to identify terrorists increased in the business community as a whole. And in the context of criminal background checks, the Specially Designated Nationals (SDN) list became more important. This is

….a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.

This list was primarily designed for use by financial institutions; they are not permitted to deal with anyone on the list. A similar restriction applies to insurance companies. As a result, OFAC alerts can sometimes show up on credit reports. This makes sense, as credit reports are often part of loans or insurance applications.

It is safe to assume that employers, also, would prefer not to hire someone on the SDN list. However, there are some issues in using it for employment screening. The list can be downloaded free from the OFAC website, and looking at it reveals some limitations. For the most part, the list is name-only with multiple aliases per person, and is a mix of individuals and organizations. Dates of birth are usually missing, or multiple possibilities are listed. Address history, if present, only includes city and country. So automated OFAC checks are name-only, and making a positive identification can be difficult if not impossible. From an employer’s perspective, a more significant problem is that the list consists of a very large number of common Arabic names. This opens up the possibility of discriminatory practices unless a great deal of care is used in applying the information.

Depending on your industry, OFAC may or may not be a useful supplement to a standard criminal check. As always, you should consult with your attorney prior to starting or modifying an employment screening program.


To order an OFAC background check, including a national criminal background check, please click here.


8 thoughts on “What is an OFAC background check — and should I use it?

  1. Steve

    The check is wrong. My employer runs them all the time on the people who listen to Alex Jones. They actually came up to me laughing saying that they checked me because of my political views. Very wrong…

    Reply
  2. nick fakhimi

    i am an u s citizen was borne in tehran iran resently a friend of maine told me that i could not bring any of my money from iran to us with out a lisinces is this true or not. i have over half a million dollers in iran & i have been tring to bring them to this country evry time i went to iran i brought with me over $20000.oo dollers & i told the costom offiece i have that much. when i looked at the application from ofac they aske so meny questions that I can not answer correctly becouse of 33years has past by & at 76 years of age that i have can not remmember exactly please tell me what to do

    Reply
  3. Reza kananitdashki

    I recently in march 13/ 2012 transferred money from Iran through an exchange company to Canada in have been arrested for work out may be by ofac or jam so check.
    I am resident of Canada.
    So what I must do this money is the of may asset..
    How much I must wait.? What must I do?

    Reply
  4. Erich C. Ferrari

    This article seems to suggest that OFAC checks are something that those running employee checks may want to consider in determining to hire someone or not. For U.S. persons, corporations included, it is not just a matter or determining whether someone is worth hiring if they appear on the list; you absolutely are prohibited from hiring such parties. As such, this shouldn’t be a suggestion, but a standard check, as U.S. persons are prohibited from having dealings with those persons appearing on the OFAC SDN List.

    As to the two Iranian individuals who have concerns about transferring funds, this is not an OFAC SDN List issue, but arises from the Iranian Transactions Regulations (31 C.F.R. Part 560). In certain cases there is no specific license authorization required, because personal remittances fall under a general authorization found at 31 C.F.R. 560.516(a)(2). For further assistance you should contact an OFAC attorney with experience in Iran funds transfers.

    For more information on such transfers you may want to review the following:

    http://ofaclicenses.com/2012/04/10/setting-the-record-straight-personal-remittances-to-and-from-iran-and-ofac/

    http://www.avvo.com/legal-guides/ugc/tips-for-those-in-the-us-dealing-with-an-inheritance-in-iran

    Reply

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