An OFAC check is a process used to verify whether a person, organization, or transaction is restricted under OFAC sanctions. This process is a critical component of compliance for banks, investment firms, and other financial institutions. It involves cross-referencing clients and counterparties against the SDN list and other sanctioned party lists. The goal is to prevent unauthorized financial transactions and avoid providing material support to prohibited entities. OFAC checks are performed both at the time of account opening and on an ongoing basis for existing customers. Many organizations use automated compliance software to streamline this process and ensure accuracy. Failure to perform OFAC checks can result in legal penalties and enforcement actions by U.S. regulators.
