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OFAC General FAQs Exam 2024_2025 fully solved & updated
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OFAC General FAQs Exam 2024_2025 fully solved & updated
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OFAC General FAQs Exam 2024/2025 fullysolved & updated
401. OFAC's 50 Percent Rule states that the property and interests in property of
entities directly or indirectly owned 50 percent or more in the aggregate by one or
more blocked persons are considered blocked. How does OFAC interpret indirect
ownership as it relates to certain complex ownership structures? -
ANSWER-"Indirectly," as used in OFAC's 50 Percent Rule, refers to one or more
blocked persons' ownership of shares of an entity through another entity or
entities that are 50 percent or more owned in the aggregate by the blocked
person(s). OFAC urges persons considering a potential transaction to conduct
appropriate due diligence on entities that are party to or involved with the
transaction or with which account relationships are maintained in order to
determine relevant ownership stakes. Please see FAQ 116 for additional guidance
on due diligence standards for intermediary parties to wire transfers. Please refer
to the examples below for further guidance on determining whether an entity is
blocked pursuant to OFAC's 50 Percent Rule.
Example 1: Blocked Person X owns 50 percent of Entity A, and Entity A owns 50
percent of Entity B. Entity B is considered to be blocked. This is so because
Blocked Person X owns, indirectly, 50% of Entity B. In addition, Blocked Person
X's 50 percent ownership of Entity A makes Entity A a blocked person. Entity A's
50 percent ownership of Entity B in turn makes Entity B a blocked person.
Example 2: Blocked Person X owns 50 percent of Entity A and 50 percent of
Entity B. Entities A and B each own 25 percent of Entity C. Entity C is considered
to be blocked. This is so because, through its 50 percent ownership of Entity A,
Blocked Person X is considered to indirectly own 25 percent of Entity C; and
through its 50 percent ownership of Entity B, Blocked Person X is considered to
indirectly own another 25 percent of Entity C. When Blocked Person X's indirect
ownership of Entity C through Entity A and Entity B is totaled, it equals 50
,percent. Entity C is also considered to be blocked due to the 50 percent
aggregate ownership by Entities A and B, which are themselves blocked entities
due to Blocked
5. How do I determine if I have a valid OFAC match? - ANSWER-Please take the
following "due diligence" steps in determining a valid OFAC match.
If you are calling about a wire transfer or other "live" transaction:
Step 1. Is the "hit" or "match" against OFAC's Specially Designated Nationals
(SDN) list, one of its other sanctions lists, or targeted countries, or is it "hitting"
for some other reason (i.e., "Control List" or "PEP," "CIA," "Non-Cooperative
Countries and Territories," "Canadian Consolidated List (OSFI)," "World Bank
Debarred Parties," "Blocked Officials File," or "government official of a
designated country"), or can you not tell what the "hit" is?
If it's hitting against OFAC's SDN list, one of its other sanctions lists, or targeted
countries, continue to 2 below.
If it's hitting for some other reason, you should contact the "keeper" of whichever
other list the match is hitting against. For questions about:
The Denied Persons List and the Entities List, please contact the Bureau of
Industry and Security at the U.S. Department of Commerce at 202-482-4811.
The FBI's Most Wanted List or any other FBI-issued watch list, please contact the
Federal Bureau of Investigation (http://www.fbi.gov/contact/fo/fo.htm).
The Debarred Parties list, please contact the Directorate of Defense Trade
Controls at the U.S. Department of State, 202-663-1282.
The Bank Secrecy Act and the USA PATRIOT Act, please contact the Financial
Crimes Enforcement Network (FinCEN), 1-800-949-2732.
If you are unsure whom to contact, please contact your screening software
provider which told you there was a "hit."
If you can't tell what the "hit" is, you should contact your screening software
provider which told you there was a "hit."
Step 2. Now that you've established that the hit is against one of OFAC's
sanctions lists or targeted countries, you must evaluate the quality of the hit.
Compare the nam
1. What is OFAC and what does it do? - ANSWER-The Office of Foreign Assets
Control administers and enforces economic sanctions programs primarily
against countries and groups of individuals, such as terrorists and narcotics
traffickers. The sanctions can be either comprehensive or selective, using the
, blocking of assets and trade restrictions to accomplish foreign policy and
national security goals.
2. How long has OFAC been around? - ANSWER-The Treasury Department has a
long history of dealing with sanctions. Dating back prior to the War of 1812,
Secretary of the Treasury Gallatin administered sanctions imposed against Great
Britain for the harassment of American sailors. During the Civil War, Congress
approved a law which prohibited transactions with the Confederacy, called for the
forfeiture of goods involved in such transactions, and provided a licensing
regime under rules and regulations administered by Treasury.
OFAC is the successor to the Office of Foreign Funds Control (the "FFC''), which
was established at the advent of World War II following the German invasion of
Norway in 1940. The FFC program was administered by the Secretary of the
Treasury throughout the war. The FFC's initial purpose was to prevent Nazi use of
the occupied countries' holdings of foreign exchange and securities and to
prevent forced repatriation of funds belonging to nationals of those countries.
These controls were later extended to protect assets of other invaded countries.
After the United States formally entered World War II, the FFC played a leading
role in economic warfare against the Axis powers by blocking enemy assets and
prohibiting foreign trade and financial transactions.
OFAC itself was formally created in December 1950, following the entry of China
into the Korean War, when President Truman declared a national emergency and
blocked all Chinese and North Korean assets subject to U.S. jurisdiction. [05-02-
06]
3. What does one mean by the term "prohibited transactions"? - ANSWER-
Prohibited transactions are trade or financial transactions and other dealings in
which U.S. persons may not engage unless authorized by OFAC or expressly
exempted by statute. Because each program is based on different foreign policy
and national security goals, prohibitions may vary between programs. [06-16-06]
4. Are there exceptions to the prohibitions? - ANSWER-Yes. OFAC regulations
often provide general licenses authorizing the performance of certain categories
of transactions. OFAC also issues specific licenses on a case-by-case basis
under certain limited situations and conditions. Guidance on how to request a
specific license is found below and at 31 C.F.R. 501.801.
To apply for a specific license, please go to our License Application Page. [06-16-
06]
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