OFAC Screening
Overview
OFAC screening checks customers and transactions against the sanctions lists maintained by the U.S. Office of Foreign Assets Control (OFAC). It ensures that financial institutions do not engage with prohibited individuals, entities, or countries. Regulators mandate OFAC compliance for all U.S. financial institutions and foreign firms doing business with the U.S. Banks, fintechs, and insurers integrate automated screening systems to detect potential matches, using fuzzy logic to account for variations in names. Non-compliance with OFAC rules can result in heavy fines and reputational damage. By embedding OFAC screening into onboarding and transaction processes, institutions protect themselves from legal exposure while helping enforce global security measures.
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FAQ
What is OFAC screening?
Checking individuals and entities against U.S. sanctions lists.
Why is it critical?
It ensures compliance and avoids penalties from U.S. regulators.
Who enforces it?
The U.S. Treasury’s Office of Foreign Assets Control.
Who must comply?
U.S. institutions and global firms dealing with U.S. markets.