By Steven D. Mercatante Esq.
 
In the first two parts of this article series we have learned what the United States Treasury Department’s Office of Foreign Assets and Control (OFAC) is, what its goals are and how you can stay compliant. In this final article in our three-part series on OFAC we will provide some guidance in case, having set up your compliance program, you have discovered that your organization has accidently failed to comply with the OFAC rules and actually set up an account with a SDN.
 
What if I have accidently set up an account with an SDN?
 
Before you react to a discovery you may have set up an account with an SDN you need to confirm whether this is the case. Treasury refers to this process as taking the appropriate “due diligence” steps to ascertain whether you have a valid OFAC match. You should be familiar with the term due diligence already; it is what you do in any number of situations regarding obtaining and verifying the correct name and TIN of your non-OFAC related payees. The government expects you to act as a reasonably prudent person and then document what it is you have done to meet the specifications of the law. If you are still unsure as to how a reasonably prudent person acts from the perspective of the Treasury Department or IRS, we recommend you review the reasonable cause regulations under Internal Revenue Code §6724.
 
In an OFAC context, you will perform your due diligence and act reasonably by first...