Sunday, March 5, 2023


The dangers posed when your active bank client is sanctioned by the Office of Foreign Assets Control (OFAC) need not be overstated. Your bank itself could be targeted for sanctions, if you are still servicing the client on the day the government press release is issued, and senior management may consider that your compliance program has failed the bank if this occurs. Their response may be personally painful to the director of compliance, for the buck stops there.

While OFAC generally supports its sanctions decision involving narcotics cases with sensitive DEA or FBI reports, which are not available to compliance officers, or if so are so redacted to be useless, other sanctions rulings are often based upon only open-source material. This means negative news and magazine articles, NGO and civil society reports, civil and criminal litigation, documents in public records, and other freely-available, albeit sometimes obscure, resources.

All of these open-source materials are in theory available to the compliance officer, but in truth and in fact, using ineffective legacy platforms and resources, compliance departments operating Perpetual Due Diligence often fail to uncover critical new information, which could be the same data collected by OFAC researchers, and used as the basis for sanctions of your current bank client. Let us suggest that you improve your chances of finding that material before OFAC tumbles to it, so that you may analyze it, as a part of your risk-based compliance program, and make a decision as to whether to terminate the client BEFORE you read about the imposition of sanctions.

To do that, we suggest you upgrade your current AML/CFT resources, to platforms employing artificial intelligence with advanced machine learning capability, to ferret out that negative information about your client in advance of any OFAC action. If you can anticipate potential sanctions activity, you protect your bank's reputation, as well as its credibility, and minimize the possibility that sanctions or civil fines of your own entity will hit your door in a very public manner, with a very loud thud.

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