Home Finance What Is an OFAC Background Check — and What Is It For?

What Is an OFAC Background Check — and What Is It For?


Whether you are looking for a new employee or looking for someone to do business with, there are always rules, regulations, and protocols that have to be followed. If your candidate is living outside of the United States, however, there are extra regulations in place to ensure the safety of not only your business but the country itself. The OFAC, or Office of Foreign Assets Control, is a part of the US Treasure and it does a background check on people outside of the country to determine if they can do business within the country.

Here is some further information about an OFAC background check and why you might need it.

Protecting the Country

The main reason why you have to do an OFAC background check on an individual or business is that you have to ensure that they are not going to pose a threat to the country. On a business scale level, the check will look to see if there are any violations of current economic and trade sanctions that are currently in place by United States foreign policy. On an individual level, it checks to see if a person is a terrorist, drug trafficker, or has any national security goals against foreign countries.

Why is this important? The last thing the United States wants is someone who is going to be coming to work in the country who could be a national security threat. Doing business with companies that go against United States policy could also mean funding for a terrorist group or regime. How can you go about determining if your candidate passes an OFAC background check? Thankfully, there are some websites that will allow you to search for a candidate or a business and read up on any restrictions that are in place. If there are, you cannot do business with them and will have to look elsewhere. The main purpose of an OFAC background check is to ensure the protection of the United States and its citizens.

Penalties for Going Against the OFAC Background Check

As mentioned above, if anyone does not pass the OFAC background check, you are not allowed to work with them by any means. The United States government does not joke around with this either and has very strict consequences to those who are found breaking this policy. If you are caught working with a business or an individual who does not pass the background check, you are going to be charged criminally and fined under regulations put forth by federal law. You can expect a fine from $50 000 to $10 000 000 along with a possible jail time of ten to thirty years. Therefore if you want your business to succeed, you have to ensure each individual passes an OFAC background check or you are going to pay dearly for it down the road.

The SDN List

Due to the events that happened on September 11, 2001, OFAC turned its attention towards terrorism and worked to ensure that no terrorists could enter the country or have business dealings with anyone within the country. The SDN or Specially Designated Nationals List was created as a result. This list is composed of individuals and companies who are acting for terrorists or other countries that the US does not have positive relations with. The SDN is mostly used for financial institutions as the US Treasury wants to ensure that these individuals are not given funding in any way, but it is also used by many companies. The list can easily be downloaded from the OFAC website and reviewed as well.

When to Use It

Not all companies and businesses are legally required to do an OFAC background check on employees. When is it needed? If your company is in the international, finance, or insurance industry, an OFAC check is recommended for anyone that you are looking to hire and do business with. If you are not within these sectors, while you might not need a background check, you still have to ensure that you are following all current trade sanctions and regulations that have been laid out by OFAC. The last thing you want is to find yourself in legal problems because you didn’t do a background check or read up on some regulations.

This is some of the information about an OFAC background check and how you can use it for your company. At the end of the day, the background check is similar to a criminal one and will help to ensure that you are employing someone who is not going to be a threat to you or the country. While you might not need to do an OFAC background check, you do still have to follow the rules and regulations that are created by them. What industry is your line of work in?