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OFAC SDN Search: A Guide for Employers [2023]

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All U.S. employers must ensure they do not engage in business with any individual or entity that has been sanctioned by the U.S. Department of Treasury Office of Foreign Asset Control (OFAC).

Did you know that a manufacturing company had to pay $4.4 million to settle with the Office of Foreign Assets Control (OFAC) for breaching the sanctions list more than 223 times?

At iprospectcheck, we regularly conduct OFAC SDN list searches for organizations across the U.S. We’ve written this guide as a resource for employers about the importance of OFAC SDN checks.

What is an OFAC SDN Search?

The Office of Foreign Asset Control (OFAC) within the U.S. Department of Treasury maintains the Specially Designated Nationals and Blocked Persons list (SDN list).

The SDN list includes individuals and entities the U.S. government has determined to be involved in activities that threaten the nation’s national security or foreign policy objectives.

OFAC enforces economic sanctions targeted against specific countries and individuals, including narcotics traffickers and terrorists. OFAC’s sanctions can be selective or comprehensive and include trade restrictions and blocked assets to protect national security.

Individuals and entities that have been placed on the list appear because they have been sanctioned by OFAC.

An OFAC SDN search involves checking the list to ensure that the individuals and entities with which your company does business have not been sanctioned. U.S. businesses are prohibited by OFAC from doing business with anyone who appears on the SDN list.

If you hire an applicant, continue to employ, or contract with someone who is listed, your organization could face severe penalties.

Who Should Be Screened?

Businesses should screen everyone with whom they do business, including parties involved in any business transaction. The following parties are examples of those that should be screened:

  • Applicants
  • Employees
  • Independent contractors
  • Suppliers
  • Vendors
  • Business associates
  • Resellers

Any individual or entity with which an organization does business should be screened to avoid violating OFAC’s sanctions.

What are the Penalties for Violating OFAC Sanctions?

Violating OFAC sanctions can result in substantial criminal and civil penalties based on the type of violated sanction.

Violations of the Trading with the Enemy Act (TWEA)

Under 31 CFR, part 501 § 501.701, any organization or individual that willfully violates the Trading with the Enemy Act (TWEA) can face criminal penalties of up to 20 years in prison and fines of $1 million for businesses.

Property, vessels, securities, and other assets involved in the violation can also be forfeited.

Individuals who willfully violate the TWEA can face fines of $250,000 per violation or twice the value of the pecuniary loss or gain, whichever is greater upon a conviction of violating the TWEA.

Violations of the International Emergency Economic Powers Act (IEEPA)

An individual or organization that violates the International Emergency Economic Powers Act (IEEPA) can also face stiff penalties.

Under 50 U.S.C. § 1705, an individual can face a civil penalty of up to $250,000 or twice the amount of the transaction involved for each violation of the IEEPA.

When the violations of the IEEPA are willful, an individual or organization can be criminally prosecuted and face fines of up to $1 million or imprisonment for up to 20 years.

Violations of the Foreign Narcotics Kingpin Designation Act

Under 31 CFR, part 598 § 598.701, individuals or entities that violate the Foreign Narcotics Kingpin Designation Act can face civil penalties of up to $1 million per violation.

Willfully violating the Foreign Narcotics Kingpin Designation Act (FNKDA) can result in the following criminal penalties under 21 U.S.C. § 1906:

  • Imprisonment for up to 10 years
  • Fine of up to $10 million
  • Both imprisonment and a fine

Agents, officers, or directors of entities that knowingly violate the FNKDA can face the following criminal penalties:

  • Imprisonment for up to 30 years
  • Fine of up to $5 million
  • Both imprisonment and a fine

Because of the severe penalties, employers must ensure they comply with OFAC’s sanctions and screen all parties with which they do business.

They should also keep current with the OFAC SDN list to identify any individuals or entities when they are added to it.

How do I Conduct an OFAC Search?

Employers can conduct OFAC SDN searches in two ways.

They can either manually search the OFAC SDN list or partner with a reliable background screening service.

Let’s take a look at each method.

1. Manually Search the OFAC SDN List

Employers can search the OFAC SDN list on OFAC’s Sanctions List Search page.

They can then choose whether they are searching for an individual, entity, aircraft, or vessel and enter the name, identification number, and particular sanctions program they want to search for.

Employers can enter the individual’s or entity’s address and choose the SDN list under the dropdown box.

The OFAC SDN sanctions search can be difficult to complete because of the potential for false hits.

It also won’t reveal other information that employers should consider when they are deciding whether or not to hire an individual or do business with an entity.

If you attempt a do-it-yourself OFAC SDN check, you might not receive complete information about an applicant.

2. Partner With a Reliable Background Screening Service

The best approach for completing OFAC SDN list searches is to partner with a reliable background screening service like iprospectcheck.

We can complete OFAC SDN screens quickly while also checking other important sanctions databases.

With our approach, we confirm the identity of anyone who appears on the list to verify whether it is your candidate.

We also complete comprehensive background checks that include other relevant searches so that you have a full picture of the background of the person you are considering.

What Other Types of Background Checks Should Employers Request?

OFAC SDN searches are not the only type of background check employers should request.

Many employers conduct thorough background screens to ensure their applicants have the qualifications to perform their jobs, are trustworthy, and are safe.

The following types of background searches might be important in addition to an OFAC SDN list search:

Here’s what some of these searches might reveal.

Criminal History

Checking an applicant’s criminal history can show whether they have a conviction or a pending criminal case.

If an applicant has a criminal conviction or a pending criminal matter, a criminal history check shows the following information:

  • Offense date
  • Type of offense
  • Offense severity (misdemeanor or felony)
  • Disposition (if disposed of)
  • Disposition date (if disposed of)
  • Sentence (if disposed of)

States that have expungement laws allow some people to request the expungement of certain types of criminal records.

If an individual has an expunged record, it won’t be reported.

Completing a criminal history check can allow you to confirm whether an applicant has any potentially disqualifying convictions so that you can evaluate whether they relate to the position you have open or could impact workplace safety.

Education Verification

Verifying the information an applicant has reported about their educational record allows you to see whether they have been honest on their resume and have the qualifications required for the job.

Education verification reveals the following information about an applicant’s past attendance at various schools:

  • Address and name of each school the applicant attended
  • Dates the applicant attended each school
  • Whether the applicant earned any degrees, certificates, or diplomas at each school attended

Employment Verification

Verifying the employment record that your applicant has reported on their resume or application allows you to see whether they have the experience you want and have been honest.

Employment verification corroborates the following types of information about an individual’s past positions:

  • Each former employer’s name and address
  • The applicant’s employment dates at each former job
  • Positions and job titles held with each former employer

Professional License Verification

If you’re hiring for a position that requires a professional license or certification, verifying the applicant’s professional license can help to ensure they have the qualifications needed to perform the job.

Professional license verification shows the following details about a professional license or certification:

  • Type of license or certificate
  • Date of issuance
  • License status and validity
  • Date of expiration
  • Public discipline or sanctions

General Services Administration System of Awards Management (SAM) Check

The General Services Administration (GSA) operates the System of Awards Management (SAM), which is a database that shows whether an individual or entity is registered with the GSA or has been debarred or excluded from participating in federal contracts or subcontracts.

If an individual appears on the SAM exclusions list, hiring them can result in severe penalties, including the potential loss of federal contracts.

Pre-Employment Drug Screen

Many employers condition offers of employment on applicants’ ability to pass pre-employment drug screens.

Most pre-employment drug tests are five-panel urine screens that reveal an applicant’s recent use of any of the following illicit substances:

  • Tetrahydrocannabinol (THC or marijuana)
  • Amphetamines (amphetamines or methamphetamines)
  • Phencyclidine (PCP)
  • Opiates (oxycodone, hydrocodone, heroin, etc.)
  • Cocaine

If an applicant fails a pre-employment drug screen, the employer might withdraw the conditional employment offer.

What are the Best Practices for OFAC Compliance?

1. Complete OFAC SDN Screening for Applicants, Employees, and Contractors

Employers should conduct OFAC SDN list checks for every applicant, employee, and contractor to ensure they are not embargoed or sanctioned.

In addition, you should check the OFAC SDN list for every party involved in any transaction your business conducts to avoid breaching the OFAC sanctions list.

2. Monitor the OFAC SDN List to Stay Current

The OFAC SDN list is regularly updated, but an employee’s name might be added later upon being sanctioned.

To avoid violating OFAC sanctions, make sure you have a system in place for ongoing monitoring of the OFAC SDN list.

3. Create Clear Policies and Procedures for OFAC Compliance

To ensure your organization complies with OFAC’s sanctions list, you should have clear workplace policies and procedures in place for when and how these searches should be conducted.

Your policy should also include information about how HR should deal with individuals or entities who are included on the OFAC SDN list.

4. Conduct Comprehensive Background Checks

An OFAC SDN list search should not be a standalone background check.

Instead, you should conduct comprehensive employment background checks on every candidate you consider.

Doing so can help to prevent potential problems and liability.

FAQs

1. Why would someone be on the SDN list?

An individual might be included on the OFAC SDN list for any of the following reasons:

  • Engaging in international narcotics trafficking
  • Working for a targeted country or group
  • Being identified as a terrorist
  • Proliferating weapons of mass destruction

2. How often is the SDN list updated by OFAC?

According to the U.S. Treasury Department, the SDN list is regularly and frequently updated.

However, the agency states that there is no set updating timetable and that names are added when necessary and appropriate.

Turn to iprospectcheck for Fast, Compliant OFAC SDN Screenings

All U.S. employers are prohibited from doing business or engaging in transactions with anyone who appears on the OFAC SDN list.

If you hire a listed individual, you could face substantial civil and criminal penalties.

At iprospectcheck, we conduct fast and compliant OFAC SDN list searches as a part of our comprehensive employment background screens.

To learn more about how we can help with sanctions checks and other types of employment background screens, call us today: (888) 509-1979

 

DISCLAIMER: The resources provided here are for educational purposes only and do not constitute legal advice. Consult your counsel if you have legal questions related to your specific practices and compliance with applicable laws.

Know Before You Hire

About the Author
Matthew J. Rodgers

Matthew J. Rodgers

Matthew J. Rodgers is a highly accomplished business executive with over 30 years of experience providing strategic vision and leadership to companies ranging from the fortune 500 to iprospectcheck, a company which he co-founded over a decade ago. Matthew is a valued consultant who is dedicated to helping companies create and implement efficient, cost effective and compliant employment screening programs. Matt has been a member of the Professional Background Screeners Association since 2009 . When not focused on iprospectcheck, he can be found spending time with his family, fly fishing, or occasionally running the wild rivers of the American west. A lifetime member of American Whitewater, Matt is passionate about protecting and restoring America’s whitewater rivers.