Since September 11, 2001, new requirements for due-diligence searches have emerged to ensure that banks and other individuals know with whom they are doing business. No one wants to be party to assisting terrorists, money launderers or people trying to avoid paying taxes or adhering to economic sanctions laws.
These searches are now a necessary part of all financial transactions and some may be expanding in the near future to encompass any entity formation transactions. Some of the searches which are currently required in financial transactions include:
1. Searches of the Specially Designated Nationals (SDN) list – This is a list maintained by the U.S. Treasury Office, specifically the Office of Foreign Asset Control (OFAC). Names of all parties involved in the transaction must be checked against the SDN list to ensure that no business is being done with anyone whose name appears on the list. The list includes names of “individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.”
Any apparent matches must be researched and reported to OFAC and they will notify you whether the match is in fact legitimate. If it is, you will not be able to proceed with the transaction with that individual involved. The requirement to check the SDN list was implemented as part of the Patriot Act in the aftermath of 9/11.
2. Searches of ANY list distributed by the federal government naming terrorists, money launderers or individuals avoiding payment of taxes or economic sanctions – The SDN list is by no means the only list of sanctioned companies and individuals maintained by the federal government. All available lists must be checked to ensure that business is not being transacted with any sanctioned individual or company. Trying to identify and check each of these lists can be a nightmare.
Fortunately, there are companies which specialize in these required due-diligence searches and Parasec has a good relationship with a nationally recognized firm in this area. Let us know you are in need of a due-diligence search of this type and we can make the necessary connections for you.