In the banking sector, OFAC regulations ensure that financial institutions do not engage in transactions with sanctioned countries, entities, or individuals. Banks are required to screen all clients, counterparties, and transactions against OFAC lists, including the SDN list. Failure to comply with these regulations can result in significant civil and criminal penalties. OFAC compliance in banking also involves monitoring ongoing transactions, freezing accounts linked to sanctioned parties, and reporting any suspicious activity to the authorities. Banks often use automated screening software to efficiently identify potential matches. This ensures that the institution remains legally compliant while reducing the risk of inadvertently facilitating prohibited activities.
