IDMrisk is a machine learning software aimed against fighting online fraud. It leverages device analytics in real time to determine if a person’s mobile, tablet or desktop device is considered legitimate or is attempting fraud.

Advanced Protections from Members of the OFAC Watchlist

The Office of Foreign Assets Control (OFAC) is an enforcement agency of the United States Department of Treasury. Under Presidential national emergency powers, OFAC acts to restrict transactions and freeze assets under jurisdiction of the United States. Many sanctions are multinational in scope, are based on instruction by the United Nations and other international government and involve the cooperation of allied governments.

OFAC implements economic and trade sanctions based on United States foreign policy against:

• Targeted foreign countries

• Regimes

• Terrorists

• International narcotics traffickers

• Those who are associated with the propagation of weapons of mass destruction

• Those involved in other threats to the national security, foreign policy or economy of the United States

OFAC Authority

OFAC enforces the Tradition with the Enemy Act, which restricts trade with countries hostile to the United States. It also enforces other national emergencies, depending on which ones are in effect. It uses sanctions to apply financial pressure to targeted individuals or nations.

OFAC gains its authority from United States federal law concerning embargoes and economic sanctions.

Trade Restriction Goals

Preventing prohibited transactions is a goal for OFAC. OFAC describes these transactions as trade or financial negotiations or other dealings that people from the United States may not engage with unless authorized by OFAC or exempted by statute.

It also focuses highly on terrorism. OFAC has a Specially Designated Nationals (SDN) list, which is a list of individuals and companies who are affiliated with or from targeted countries. It also lists individuals, groups and entities restricted under programs that are not country-specific.

Trade Exemptions

OFAC has the freedom to exempt particular transactions from prohibition and allow them to occur. This can be achieved by issuing a license for certain categories of transactions or by issuing a specific license on a case-by-case basis.

Penalties for OFAC Non-Compliance

Criminal penalties apply to institutions or individuals that knowingly and willfully commit OFAC violations. Civil penalties, in contrast, apply to institutions or individuals who non-willfully commit OFAC violations.

According to OFACs Final Rule, penalties for transaction that have occurred after November 2, 2015 are as follows:

Statute

• Trading with the Enemy Act

• International Emergency Economic Act

• Foreign Narcotics Kingpin Designation Act

• Antiterrorism and Effective Death Penalty Act of 1996

• Clean Diamond Trade Act

2018 Maximum Civil Monetary Penalties

• $86,976

• Up to $295,141 or twice the amount of the underlying transaction

• $1,466,485

• Up to $77,909 or twice the amount a financial institute is required to retain possession or control

• $13,333

Safeguard Your Business

If you are a financial institution or an insurance company it is important to make sure you do not do business with anyone on the OFAC SDN list. This can lead to KYC and AML violations for dealing with these individuals or countries and can result in severe fines, as noted above.

Consult with an attorney to ensure an OFAC check is right for your business. If it is deemed as an important step in safeguarding your business, consider using IDMERIT’s business verification solution, IDMverify, to validate all businesses and individuals you interact with. IDMverify can check that these individuals and businesses are legitimate and that they are not a part of the OFAC SDN list.

Politically Exposed Persons

The Financial Action Task Force (FATF) describes politically exposed persons (PEP) as follows:

• Any individual who has been placed in a prominent public position by a domestic or foreign country. Examples include Heads of state, senior politicians, military officials, and other important political party officials.

• Any individual who has been a senior executive of a foreign government-owned corporations

• Immediate family members of such individuals

PEP is a term to describe individuals with formal political power along with informal, yet influential political people. This definition is closer to the political reality in many countries and how it correlates with a country’s corruption and money laundering patterns.

How long is Someone Considered a PEP

Former public officials and elected officials do not lose their influence once they are out of office; rather, they move their influence elsewhere and assert it in different ways than how they used it while in office.

A person who was once a PEP could always remain a PEP under the definition given by the FATF. How to deal with a previous PEP should be based on risk assessment rather than on an imposed time limit. The risk-based approach requires that an anti-money laundering and terrorism financing assessment be made on a PEP who is no longer entrusted with a prominent public function, and that effective action to mitigate risk take place.

Some factors that affect risk include:

• The level of influence a PEP still has

• The seniority of the position that the individual held as a PEP

• Whether the individual’s previous functions are related to their current functions

Who to Check and When

Performing a PEP check should occur before entering a business relationship with someone. The idea is that a PEP would be discovered before any business relations are established.

Existing clientele should be monitored on an ongoing basis as well. This helps ensure that their funds are not being sourced from a corrupt entity.

Who should Undertake PEP Screenings

Any bank or financial institution that must follow anti-money laundering regulations should perform PEP screenings during their client onboarding process. This should be a part of a comprehensive Know Your Customer (KYC) program.

Guidelines for Dealing with PEPs

Institutions should have appropriate risk-management system in place to determine if a customer is a PEP according to the FATF. Senior management should approve all business relations occurring with PEP customers. Before entering business with a PEP, reasonable measures should be taken to establish the source of their funds. Furthermore, ongoing monitoring should be established throughout the business relationship.

Protect your Business

If you are a financial institution or an insurance company it is important to make sure you know when you are doing business with a PEP. These individuals are more likely than others to be involved in bribery or corruption due to the influence they hold through their position. This can lead to KYC and AML violations for dealing with these individuals or countries and can result in severe fines for violations.

Consult with an attorney to ensure a PEP check is necessary for your business. If so, consider using IDMERIT’s identity verification solution, IDMverify, to validate all individuals your company interact with. IDMverify can check whether an individual is a PEP or not.

Key Features

• Accurate Identity Verification Results

• Multiple Sources for Same Country/Region

• Real Time Processing

• Boutique Approach to Global Business

• Reliable Regulatory Compliance

• Flexible Configuration

• Simple Application

• Actionable Fraud Prevention Planning