credit union compliance toolsThink the Office of Foreign Assets Control (OFAC) isn't exciting to talk about? Think again! Here are 5 facts about OFAC that apply to credit unions and can add some zest to an otherwise heavy compliance requirement.

  1. OFAC Protected Us from Nazis: OFAC is part of the US Department of Treasury. While the actual Office of Foreign Assets Control did not exist until 1950, the Treasury Department has a long history in dealing with economic sanctions against countries and regulating which foreign countries the U.S. does business with. During the War of 1812, then Secretary of the Treasury, Gallatin imposed sanctions against Great Britain for the harassment of American sailors. Right before the official OFAC was established, the Office of Foreign Funds Control (the "FFC") served in a similar capacity, and was established after Germany invaded Norway in 1940 to prevent Nazis from using occupied countries' holdings.

  2. OFAC Fights Terrorists: OFAC sanctions and embargoes can be country-based, one of the most famous being the US embargo against Cuba (The United States maintains a comprehensive economic embargo on the Republic of Cuba, however in October of 2016 OFAC published amendments in accordance with then President's course on Cuba). List-based sanctions impose restrictions against specifically designated parties known to pose a threat to the security of the U.S. OFAC is now used in large part to combat both the war on terror and the war on drugs, identifying terrorists, terrorist organizations, companies with ties to terrorist organizations, and drug traffickers.

  3. OFAC Can Be the President's #2: OFAC acts under Presidential wartime and national emergency powers. This in itself is a tricky subject as the Constitution does not expressly grant the President additional war powers or other powers in times of national emergency.  However, the courts will recognize a right of the Executive Branch to use emergency powers if Congress has granted such powers to the President. Therefore, when an embargo, sanction, or terror watch list is issued under these powers, the OFAC takes charge of enforcement.

  4. OFAC Is An Ally to Allies: Many of the sanctions that are imposed on countries, companies and people come from the United Nations and other international mandates. For this reason, the OFAC also works in very close cooperation with allied governments.

  5. OFAC Lists Are Impulsive:  The list of people and businesses that your credit union has to be aware of that fall under OFAC does not get updated on a timed, regular basis.  It does, however, change frequently.  It is up to your credit union to ensure you are in possession of the latest information to maintain compliance and your credit union's technology should make this easy.

Fighting Nazis and drug runners while being a friend to our international allies... Did you know that OFAC was such a freedom fighter on behalf of the U.S.? Your software partner should offer credit union compliance tools such as a built-in OFAC check on new accounts, transaction, new loans, and more to help your CU be a crime fighter on behalf of your members.

Download the Compliance eGuide 

 

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