KLEIN CENTRAL OPERATIONS - Bankers Online
KLEIN CENTRAL OPERATIONS
PROCEDURE MANUAL
OFAC ACTIVITIES Revised 11/1/01
PURPOSE:
The purpose of the OFAC Activities procedure is to completely comply with OFAC regulators, and to help ensure no funds are transferred into or out of accounts blocked in accordance with OFAC sanctions. In the event a funds transfer is attempted, we will ensure compliance with reporting procedures.
BACKGROUND:
The Office of Foreign Assets Control (“OFAC”) oversees the enforcement of federally-mandated economic sanctions against certain foreign governments, financial institutions, and "specially designated nationals" (individuals or companies which have been named as targets of sanctions either due to drug trafficking, terrorism, or some other illegal activity.) To comply with the regulations, C.Ops must have a compliance program in place so that we are able to react to frequent changes to the sanction lists, and can identify accounts or transactions which would be subject to the sanctions.
The OFAC sanctions are numerous and varied. The actual prohibited transactions or requirements vary, depending upon the sanctions applicable to a particular entity. Total compliance with OFAC sanctions requires a great deal of information, some of which my need to be obtained with legal assistance. Our procedures have been developed with this in mind, and do not address specific issues with specific governments or entities.
RETENTION:
SDN List must be kept current at all times (it is not necessary to keep prior SDN lists)
OFAC mandatory reporting – 5 years
Listing if Blocked accounts – 5 years
Listing of Unblocked accounts – 5 years after date of release
Legal Opinions and research - permanent
RESPONSIBILITY:
Central Operations Fedline Team (wire monitoring)
Central Operations Specialist Team (reporting and compliance)
SUPPLIES REQUIRED:
Internet Access
Treasury Reporting forms
PROCEDURES:
Maintaining the Specially Designated Nationals (SDN) List…
The SDN list is the most important piece of the OFAC compliance process. This is the master list, created and updated by OFAC, of all entities and institutions that are affected by OFAC sanctions in some way.
Notifications of SDN List Updates
As the list is updated, e-mail alerts are received to inform us that the list has been updated. These e-mail alerts are available by subscribing to a number of different sources. The preferred method is to receive an alert via the Compliance Online website. A subscription to this general compliance alert service may be obtained by visiting:
To ensure that there is no risk of missing an updated list, the OFAC website should be accessed on the 1st of each month to ensure that the most recent date of the SDN list on-line is the same as the most recently downloaded file. A recurring task should be built so this is not overlooked.
Downloading the SDN List
The SDN List is available on the Department of the Treasury website: ofac, and is in a compressed format.
1. Access the website, and scroll down to the “Information on Specially Designated Nationals and Blocked Persons” section of this page and then select Delimited Files. Note the date the list was last updated.
2. When prompted to access the file, select "save this program to disk", select “OK”.
a. Save the file in the “OFAC” folder on the shared directory, in the Extraction subfolder
b. Exit the website when the download is complete
3. Access the OFAC folder via Windows Explorer, and select the file “t11sdall (1)”.
a. This is a DOS based program that will run automatically and decompress the file into a readable format. The word “Finished” will appear after several seconds, when the decompression is complete.
4. In Explorer, open the “sdnlist” file. When prompted, open the file using the Wordpad program.
5. On the main Menu Bar, select Edit - Select All -Copy
6. Open a new MS Word document, and Paste the copied text into the Word document
7. Save the Word document in the OFAC folder, in the current year. Use the date of the SDN list as the file name.
8. In Explorer, delete all files in the Extraction Activities subdirectory.
9. Send an email, with the list attached, to the Bank Operations officers or other designated individual at each institution.
If The Wire Transfer Department Has an OFAC “HIT” …
The various procedures files for processing Funds Transfers instruct the Fedline Operator to do the following if a customer attempts to wire funds to, or receive funds from, an entity that appears on the SDN list:
1. Notify Central Operations Management - they may chose to contact legal counsel
2. E-Mail the Bank Operations Officer.
3. Call the OFAC Compliance Hotline at 1-800-540-OFAC (6322).
The Fedline Operator will work under the direction of Central Operations Management, Legal Counsel, and the OFAC Compliance contact to ensure that all necessary actions are completed. This could result in many things, including blocking the funds, rejecting the funds, or allowing the transaction to take place. (For a definition of common OFAC terms, see Appendix A to these procedures)
Misc. OFAC Transaction Requirements – Handling Blocked Funds
31 CFR, Chapter 5, Part 500.205 – This section of the regulation states that funds must be maintained in the form of a Time Deposit account (Certificate of Deposit). The CD Term must be the shortest term offered by the bank, and may not exceed 6 months. In addition, if the bank offers multiple short-term products, the class code that pays the highest interest rate must be chosen.
Either Central Operations Management or the Operations Specialist will work with the Operations Officer at the affected bank to set up this account. Because Central Operations does not have the ITI Security Clearance required to open new accounts, Central Operations will place the funds in GL 10995. The banker that opens the CD will then process a debit to GL 10995 and credit the new account.
A new portfolio must be opened for each entity, and a new account must be opened for each attempted transaction. In addition, appropriate informational addenda’s must be placed on the account and port level, and the appropriate transaction restriction code must be placed on the account. Central Operations will work with the Bank Operations Officer to ensure that these additional steps are taken (either by C.Ops or by the bank).
OFAC Reporting Requirements
Immediate Reporting
Within 10 days of blocking or rejecting funds, a report must be filed with the Treasury. Our involvement in immediate reporting will revolve only around wire transfers. This type of reporting is discussed in part 501.603 & 501.604 of the regulation. There is no standard reporting form provided by the treasury department, but a standardized form has been created (See appendix) The reporting will be printed on Central Operations letterhead.
1. Make a photocopy of the incoming wire transfer from the Fedline Terminal (if applicable).
2. Complete the report with the following information:
• Originator Name
• Beneficiary Name
• Address of both Beneficiary and Originator, if available
• Originating Financial Institution (if applicable)
• The account number of the CD that was established to retain the funds
• The Term and Rate associated with the CD that was established to retain the funds
• The amount of the transaction
3. Complete a section on the “report” to indicate the name of the Central Operations Manager and telephone number.
4. Photocopy all documents, and file in the appropriate location.
5. Fax the report and supporting documents if directed to do so by the OFAC Compliance contact (when the violation was originally identified). Otherwise, send the report via certified mail (with return receipt) to:
Office of Foreign Assets Control
Compliance Programs Division
US Treasury Department
1500 Pennsylvania Avenue NW – Annex
Washington, DC 20220
Annual Reporting
On an annual basis, any Financial Institution that has been involved in blocking or rejecting funds, must file a report with the Treasury. Our involvement in the annual reporting will revolve not only around wire transfers, but will include any funds blocked by the bank throughout the previous year.
Annual reporting is discussed in part 501.603 & 501.604 of the regulation. There is a standard reporting form provided by the treasury department, and is available on the OFAC Website – Form TDF 90-22.50.
The annual report must include property that has being held as of 6/30 of the current year. The reporting period runs from 7/1 to 6/30. Annual reports are due on September 30th.
1. Send an e-mail to each bank’s operations officer, requesting information on any blocked or rejected transactions.
2. Pull the OFAC file for each bank from the centralized location.
3. Access the OFAC Website at .
4. Go to the General Info Page, and select the Annual Report Of Blocked Property Icon.
5. Print a copy of the TD F 90-22. 50 report from the website. Make as many copies are needed to report for each affected bank. It is not necessary to file a report for a bank that has not blocked, frozen, or rejected funds during the reporting period.
6. Following the instructions on the report, complete all fields on both pages of the report for each bank. Include information on all funds reported by the banks and Central Operations.
7. Make a photocopy of the completed reports, and file in the centralized location.
8. Mail the completed reports to:
Office of Foreign Assets Control
Compliance Programs Division
US Treasury Department
1500 Pennsylvania Avenue NW – Annex
Washington, DC 20220
BIBLIOGRAPHY:
31CFR, Chapter 5, Part 500 and 501, as amended from time to time
“Foreign Assets Control Regulations for the Financial Community” - Dept of Treas., 10/3/01
ABA Bank Compliance Newsletter, Mar-Apr 1996
ABA Bank Compliance Newsletter, Nov-Dec 1998
RELATED C.OPS PROCEDURES:
Commercial Wire Transfer
Wire Transfer Processing
APPENDIX A: Glossary of common OFAC terms
A—Blocking
Also called “freezing,” this is a form of controlling assets under U.S.
jurisdiction. While title to blocked property remains with the designated
country or national, the exercise of the powers and privileges normally
associated with ownership is prohibited without authorization from
OFAC. Blocking immediately imposes an across-the-board prohibition
against transfers or transactions of any kind with regard to the property.
B—Blocked Account
An account with respect to which payments, transfers, withdrawals or
other dealings may not be made except as licensed by OFAC or otherwise
authorized by the Treasury Department. Debits are prohibited, however,
credits are authorized.
C—General License
A regulatory provision authorizing certain transactions without the filing
of an application with OFAC. Its terms are listed in the appropriate
Regulations. The concept is similar in meaning to that employed by the
U.S. Department of Commerce. Transactions consistent with normal
banking practice are frequently permitted by general license. For
questions about general licenses, contact OFAC at 202/622-2520
D—Specially Designated Nationals and Blocked Persons
Individuals and entities which are owned or controlled by, or acting for or
on behalf of, the Governments of target countries or are associated with
international narcotics trafficking or terrorism. These individuals and
entities are listed on the Treasury Department’s Specially Designated
Nationals and Blocked Persons list so that persons subject to the
jurisdiction of the United States will know that they are prohibited from
dealing with them and that they must block all property within their
possession or control in which these individuals and entities have an
interest.
E—Property
Anything of value. Examples of property include: money, checks, drafts,
debts, obligations, notes, warehouse receipts, bills of sale, evidences of
title, negotiable instruments, trade acceptance, contracts, and anything
else real, personal, or mixed, tangible or intangible, “or interest or
interests therein, present, future, or contingent.” Practically everything
that banks do every day involves “property” within the meaning of the
regulations. Likewise, “property interest” is defined as any interest
whatsoever, direct or indirect.
F—Census
Comprehensive statistical survey of blocked assets conducted from time
to time by OFAC. Response is mandated by law. The information
obtained from the survey is of vital importance to the U.S. Government
for foreign policy planning purposes, to assist Treasury in the
preservation of blocked assets, and to enhance their value for U.S.
claimants, including financial institutions.
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