Office of Foreign Assets Control (OFAC)

OFAC applies sanctions programmes set by US foreign policy and national security goals. It adds names to its lists, issues licences that allow otherwise banned activity, publishes guidance, and fines firms that break the rules. Its main list is the Specially Designated Nationals and Blocked Persons List. US persons, a term that includes US companies, citizens and anyone physically in the United States, must not deal with listed parties and must block their property. In practice its reach goes much further. Payments in US dollars usually pass through US banks, so non-US firms are drawn in, and OFAC can also target foreign parties who deal with a listed target. Banks outside the US therefore screen against OFAC lists as a matter of routine. A firm with no American presence can still end up facing OFAC action through its dollar flows.

A bank in a Gulf country sends a dollar payment for a client through its US correspondent. The payment mentions a vessel that OFAC has listed. The US bank blocks the funds and reports to OFAC. The Gulf bank is asked to explain, reviews its screening of vessel names, and finds the field was never checked. It adds the field to its filter.