The US Department of Treasury’s Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency that administers and enforces economic and trade sanctions against targeted countries and individuals that threaten the United States economy, national security, or foreign policy.
OFAC publishes the Specially Designated Nationals (SDN) and Blocked Person List, which keeps track of individuals and companies owned or controlled by targeted countries, groups, regimes, terrorists, or international narcotics traffickers, as well as those that operate under programs that are not country-specific. These targeted individuals and entities are collectively known as “Specially Designated Nationals.”
OFAC administers many different sanction programs that use the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. US citizens are generally prohibited from dealing with anyone on the SDN list and must block any properties in their possession that an SDN has an interest in.
OFAC’s Enforcement Action Against MidFirst Bank
Last month, OFAC issued a Finding of Violation (FOV) to MidFirst Bank, an Oklahoma-based financial institution, for violating The Weapons of Mass Destruction Proliferators Sanctions Regulations. This FOV was the result of 34 transfers facilitated by individuals newly sanctioned pursuant to Executive Order 13382, which blocks the property of persons engaged in proliferation activities and their support networks.
OFAC designated two existing account holders at the bank, but MidFirst allegedly failed to detect this change until two weeks after the designation. During this 14-day period, the bank facilitated five transactions totaling over $610,000 on behalf of the newly designated SDNs.
Though MidFirst bank regularly screened its existing customers, they allegedly failed to understand the frequency with which OFAC updates the SDN list. Instead of screening individuals daily, MidFirst Bank’s program screened individuals every 30 days. MidFirst Bank made immediate efforts to remedy this insufficiency, enacting a program to increase screening frequency and quality of screenings. This contributed to OFAC’s decision not to impose a civil penalty.
How the SDN List Applies to Healthcare
Financial institutions are historically the largest focus for OFAC oversight, but recent enforcement actions have included small and medium-sized healthcare companies faced with OFAC investigations and penalties. In 2016, enforcement actions against United Medical Instruments Inc., World Class Technology Corporation, and HyperBranch Medical Technology, Inc. resulted in penalties of over half a million dollars.
Although OFAC is not specific to healthcare compliance and the US Department of Health and Human Services (HHS) does not currently require screening of OFAC sanctions lists, healthcare organizations are still susceptible to hefty fines and penalties for breaking OFAC sanctions. This means healthcare providers have a responsibility to regularly check the SDN list to ensure compliance with all OFAC sanctions and regulations.
How Often Should You Check the SDN List?
OFAC’s SDN list is updated at random instead of on a predetermined schedule. This means it may be updated as often as a few times a week, or as rarely as once every six months. This makes it challenging to know when you should search the SDN list to see if names have been added or removed. To ensure OFAC compliance, we recommend screening the SDN list daily.
At ProviderTrust, we offer fully automated OFAC SDN and Non-SDN List monitoring. Our automatic monitoring program will help you reduce your organizational risk and ensure you stay compliant with OFAC sanctions and regulations. Adding automatic SDN List checks in addition to OIG and SAM exclusion monitoring allows your organization to stay compliant with all federal regulations – reducing your risk and upholding the highest standards of patient safety.