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.

 

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