OFAC- How it Relates to Title

OFAC ( Office of Foreign Assets Control) is a financial intelligence and enforcement agency of the United States Treasury Department. The concept of OFAC has been around since the War of 1812, when it was used for economic sanctions against Great Britain. Through the years, because of wars and human rights violations, the list has grown. With the proliferation of terrorism, drug running and financial malfeasance, the list was appended to include individuals. OFAC, as we currently know it, has been around since 1962.

 In our specific case, involving incoming and outgoing wires for loan proceeds, loan payoffs, and persons depositing or receiving funds into or from an escrow via the fed wire system, OFAC has, on occasion, caused a delay in the receipt of wired funds. The process is as follows:

 OFAC has multiple lists of sanctioned countries, companies and individuals that are accessible by financial institutions. When a wire is generated, both the issuing bank and the receiving bank run the details of the wire transaction through software that compares the contents of the wire to the sanction lists, in compliance with the mandates of OFAC. If it is determined that information on the wire matches information on the sanctions lists, the wire is held back and further information is requested to allow the institution to disqualify the wire from the sanctions list (full name, date of birth, SSN, address, place of birth, etc.).

 If the issuing bank finds information on the wire to be on the sanctions list, they request the additional information from the initiator of the wire. If that information proves that the person in question is not on any of the sanctions lists, then the wire is released.

 If the receiving bank finds information on the wire to be on the sanctions list, they request the additional information from the issuing bank, which then has to request it from the initiator of the wire. If that information proves that the person in question is not on any of the sanctions lists, then the wire is released. Unfortunately, the information flow is as follows: request for information goes from the receiving bank to the issuing bank, and then to the initiator of the wire. Then the response to the request goes from the initiator of the wire to the issuing bank, and then from the issuing bank to the receiving bank. If the initiator of the wire is a warehouse lending operation, then they have to request and receive the information from the mortgage company that utilizes the warehouse lender, which adds one more step in the flow of information in BOTH DIRECTIONS.

 You can imagine the potential for delay in this process.

 Remember, just because your client’s wire got held up by OFAC, does NOT mean there is anything wrong with your client. It means, in accordance with federal law, that there is enough similarity between their name and the name of someone on the sanctions list to require due diligence proving that they are not that person.

 You may want to familiarize yourself with www.sanctionssearch.ofac.treas.gov which is an OFAC website where names can be searched to see if they are on one or more sanctions lists.

 Please be aware that the title department, when they run their title search, has to run the names through the same sanctions lists provided by OFAC. The advantage they have is that they have a complete name to compare to the list instead of just a last name as we usually have on our wires.

Tom Diller | VP Director Business Development | Equity Title Agency

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