Frequently Asked Questions

The Patriot Act, OFAC and the Specially Designated Nationals List

What is the Patriot Act? 

Commonly known as the USA Patriot Act, the official name of the statute is “The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act”.  The Act was signed into law on October 26, 2001.  The Act strengthened existing requirements and enacted additional regulations dealing with terrorism and financial disclosures to prevent the funding of terrorist activities.

How does the Patriot Act affect automobile dealers?

The Patriot Act requires dealers to establish and maintain anti-money laundering programs.  The Act also requires dealers to respond to information requests from Federal law enforcement agencies.   If a federal law enforcement agency requests information from a dealer, the dealer must expeditiously search its records to determine whether it maintains or has maintained any account for, or has engaged in any transaction with any entity, organization or individual named in the request. 

What is OFAC?

The Office of Foreign Assets Control (“OFAC”) is a division of the U.S. Department of Treasury.  OFAC is responsible for administering economic and trade sanctions.  OFAC also blocks financial transactions and assets of terrorists and foreign countries that are considered a threat to national security.  OFAC publishes a list of individuals, organizations, businesses and governments with whom financial institutions in the United States (including auto dealers) cannot facilitate a financial transaction.  Individuals, organizations, businesses and governments that are included on the OFAC list are considered Specially Designated Nationals, although more commonly the term is abbreviated to “SDN”.

Do dealers need to check the SDN list for every transaction, whether or not the customer pays in cash?

Yes.  OFAC requirements are very broad; they apply to all transactions, including any business relationship established to provide regular services, dealings and other financial transactions. The OFAC requirements apply to both cash and credit transactions. All US citizens, permanent resident aliens (regardless of where they are located), all persons and entities within the US , and all US incorporated entities and their foreign branches must follow the OFAC requirements.  The OFAC prohibition against transacting business with an SDN means that before agreeing to facilitate a financial transaction, a US person or entity must check the OFAC SDN list.   

Where can I find the SDN List?

The list is found on the US Treasury Department’s website, http://www.treasury.gov.  Locate “OFAC SDN LIST” on the web page, which will take you to the list.

What should I do if there is the name of a potential customer appears to be a match with the SDN list?

If the match is to the SDN list, you may need to call OFAC on their hotline at 1-800-540-6322.  However, some “hits” or “matches” that appear on credit reports or other reports provided by vendors to dealers might indicate that the person or entity’s name is on another list, such as the Denied Persons List or the FBI’s Most Wanted List. 

OFAC recommends that prior to calling their hotline, the following “due diligence” steps be taken:

1. Determine if the match is against the SDN list.  In order to do this, you may need to contact your software provider.  If the match is against another list, contact the “Keeper” of that list.

2. Once you determine that the match is against the SDN list, evaluate the quality of the hit.  Compare the name of the person involved in your potential transaction with the name on the SDN list.  If your transaction is with an individual, but the SDN list is with a company or organization, or if only a partial match of the person’s name has occurred, OFAC does not require that you contact their hotline.

3. OFAC also recommends that you compare the detailed information on the SDN list with information in your possession.  The SDN list often includes the person’s full name, address, nationality, passport, tax ID number, birth date and aliases.  If your potential customer’s full name is a match, and you do not have any of this information for comparison purposes, you should request additional information and make this comparison.  After comparing information, you may find that your potential customer is not a Specially Designated National.

4. If you compare information and believe that your potential customer is the SDN listed on OFAC’s list, call the OFAC hotline at 1-800-540-6322.