Office of Foreign Assets Control (OFAC)
Office within the U.S. Department of the Treasury that administers and enforces economic and trade sanctions against targeted foreign countries, terrorism-sponsoring organizations, terrorists, international narcotics traffickers, and others based on U.S. foreign policy and national security goals. After September 11, 2001, OFAC became a significant player in the anti-money laundering field as well. The office issues various lists, including “Specially Designated Narcotics Traffickers” and “Specially Designated Terrorists,” and its regulations require U.S. persons, including financial institutions, to block and file reports on accounts, payments or transfers in which an OFAC-designated country, entity or individual has an interest. OFAC requirements have an extraterritorial reach because they require U.S. persons and entities located outside of the U.S. to comply. Independent of origin or final destination, if a U.S. financial institution acts as an intermediary for a transaction that involves an OFAC-designated entity, the funds must be blocked. See
Literally, away from one’s own home country—if one lives in Europe, the U.S. is “offshore.” In the money laundering lexicon, the term refers to jurisdictions deemed favorable to foreign investments because of low or no taxation or strict bank secrecy regulations.
Offshore Bank
Though licensed to conduct banking activities, an offshore bank is prohibited from doing business with local citizens or in local currency as a condition of its license.
Offshore Financial Center (OFC)
Institutions that cater to or otherwise encourage banks, trading companies, and other corporate or legal entities to physically or legally exist in a jurisdiction but limit their operations to “offshore,” meaning outside the jurisdiction (see Offshore). OFCs have historically been located in the Caribbean or on Mediterranean islands to be in reasonable proximity to the major financial centers of the U.S. and Europe.
Offshore Group of Banking Supervisors (OGBS)
Organization that promotes the supervision of banks in their jurisdictions and furthers international cooperation among Offshore Banking Supervisors, Basel Committee member nations, and other banking supervisors. The OGBS was established in 1980 at the instigation of the Basel Committee on Banking Supervision, with which it maintains close contact. Through the Working Group on Cross-Border Banking, the Offshore Group joined with the Basel Committee in preparing a paper on Customer Due Diligence for Banks, which the Basel Committee issued in 2001. This paper reinforces principles set out in earlier Basel Committee papers by providing more precise guidance on the essential elements of Know Your Customer standards and their implementation. Offshore Group members are fully committed to the KYC standards contained in the paper. The Working Group also has produced as an annex to the Customer Due Diligence paper a General Guide to Account Opening and Customer Identification. See
Omnibus Account
See Clearing Account.
Operational Risk
The risk of direct or indirect loss of operations due to inadequate or failed internal processes, people or systems, or as a result of external events. Public perception that a bank is not able to manage its operational risk effectively can disrupt or harm the business of the bank.
Organization for Economic Cooperation and Development (OECD)
International organization that assists governments on economic development issues in the global economy. OECD houses the FATF secretariat in Paris. See,2987,en_2649_201185_1_1_1_1_1,00.html.
Organization of American States: Inter-American Drug Abuse Control Commission (Comisión Interamericana para el Control del Abuso de Drogas) (CICAD)
OAS has issued several sets of anti-money laundering recommendations through its Inter-American Drug Abuse Control Commission (CICAD). They include amendments to the OAS Model Regulations issued in 1992. CICAD has sponsored and coordinated training seminars for public officials and bankers on anti-money laundering measures and oversees the anti-money laundering efforts of its member countries in the Western Hemisphere. See
The account holder or, where there is no account, the person (natural or legal) which places the order with the financial institution to perform the wire transfer.
Over The Counter (OTC)
Two distinct meanings in the money laundering context:
  1. As used in U.S. Bank Secrecy Act reporting forms, it refers to deposits of cash made physically at a branch.
  2. In the securities industry, it describes the market for trading equities that are not listed on an organized stock exchange, or for trading securities such as corporate bonds, mortgage- backed or asset-backed securities, currency swaps, etc. In the OTC market, trading is conducted remotely by broker- dealers rather than on a physical exchange floor, and prices are set by negotiation between the buyer and seller rather than by “auction bidding” on the floor of an exchange.