OFAC and the Role of the Three Lines of Defense

Author: Tara Johnston, CAMS-Audit

Unlike Bank Secrecy Act legislation, OFAC-related regulations have applicability outside U.S. borders. All U.S. persons, to include permanent residents, individuals located in the U.S and U.S. banks, their domestic branches, agencies, international banking facilities, foreign branches and overseas offices and subsidiaries are required to comply with OFAC regulations when transacting in U.S. dollars. This includes U.S. branches for foreign financial institutions, as well as U.S. persons working at foreign corporations outside of the U.S. at the time the transactions are processed. (Slear 2006) At a high-level, OFAC requires the blocking of accounts and property of specified countries, entities and individuals. It also prohibits or requires the rejecting of unlicensed trade and financial transactions with sanctioned countries, entities and individuals. (Federal Financial Institutions Examination Council 2010)

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