Opening Securities and Futures Accounts from an OFAC Perspective
Introduction
The Treasury Department’s Office of Foreign Assets Control (OFAC) is responsible for administering and enforcing economic and trade sanctions based on U.S. foreign policy, national security, and economic goals against targeted foreign countries, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction. All U.S. persons, including securities and futures firms, such as investment advisers, broker-dealers, futures commission merchants, introducing brokers in commodities, commodity pool operators, and commodity trading advisors, are subject to the requirements of OFAC. The guidance below is intended to assist such firms when evaluating new clients and investments or transactions by such clients.
Account Opening Review
OFAC recommends that every securities and futures firm establish and maintain an effective OFAC compliance program. In the event of...
1) OFAC puts financial industry on notice that it cannot take other financial regulators' KYC standards—even those located within the same Department of Treasury as OFAC—as indications that they are acceptable to OFAC as well.
2) While OFAC reserves the right to apply a strict liability standard to securities clearing firms, it has not yet (as of 5/2019) pursued an enforcement action against a firm that otherwise appears to have complied with the FinCEN rule.
Since the issuance of this guidance, OFAC has, however, pursued enforcement actions for dealings with omnibus accounts of which part of the asset pool was beneficially held for sanctioned parties. See Civil Enforcement Information - Clearstream Banking, S.A. (2014).
3) OFAC implies that a blocked person acting as "guarantor" on an account would render that account property in which the guarantor has an...