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The Story of a Business Manager's Partial OFAC/SDN Hit, During Weekend Hours

Posted by Vanguard Dealer Services on Oct 18, 2017 1:20:00 PM

The Story of a Business Manager's Partial OFAC/SDN Hit, During Weekend Hours

What happens when a diligent Business Manager for an auto dealership encounters a hit on OFAC's list of blocked persons, on a Saturday? This article tells the story of one dealership confronting that scenario.

An arm of the U.S. Treasury Department, the Office of Foreign Assets Control ("OFAC"), administers and oversees laws designed to financially starve those deemed hostile to U.S. interests. The laws prohibit U.S. businesses from conducting business with those appearing on certain "blocked" lists. Blocked targets include terrorists and their supporters, narcotic kingpins and their associates, and persons from blocked countries. Toward this end, OFAC maintains a frequently updated list of Specially Designated Nationals and Blocked Persons ("SDN"), naming individuals, organizations, and foreign entities barred from conducting business within the United States. Typically, an auto dealership taps an electronic resource to conduct the SDN check, e.g. a credit bureau's tracker or the federal SDN list directly.

An auto dealership's Business Manager spoke with a customer intent on buying a car. Adhering to the dealership's OFAC compliance procedure, the Business Manager compared the customer's name with the online SDN list. That file appears in a plain text format, listing more than 5000 individuals and businesses. To preclude human error, the Business Manager entered the customer name in the field provided by the web browser's "find on page" feature. The Business Manager, noticing a partially matched name, next consulted a more sophisticated searchable database provided by the Treasury Department. The same partial name match resulted. Following the federal government's winnowing suggestions, the Business Manager determined, the name reflected neither a company nor vessel; and, the gender listed on the SDN list matched the customer's gender.

The gender match triggered the Business Manager's immediate call to the OFAC's 800 number. But this situation unfolded on a Saturday. Like other businesses, OFAC delegates phone call handling to an automated system during closed hours. The Business Manager left a voicemail detailing his concern.

Anticipating the return call, the Business Manager segregated the customer's particulars in a single manila file folder, ensuring quick retrieval when the OFAC responded. Those particulars included the customer's name, Social Security number, address, and additional identification markers.

The OFAC agent returned the voicemail a few days later, requesting only the customer's name. Like the BusinessManager, OFAC discerned a mere partial hit. The OFAC agent approved the tentative transaction.

Wisdom infused the Business Manger's follow-up compliance activity. A failure to conduct a due diligence SDN check invites criminal sanctions (a maximum of 30 years imprisonment), financial penalties (from $50,000 to $10,000,000), or both civil and criminal sanctions. The OFAC is further empowered to levy a penalty, up to $1,075,000 per violation.

Vanguard Dealer Services, a premier automotive consulting company, focuses on improving the finance and insurance aspects of an automotive dealer's business. To learn our options addressing your specific needs as a business, as well as enhancing customer service, acquisition, and retention, please contact us.

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