When Should Car Dealers Do an OFAC Check

Car dealers should conduct an OFAC check as part of their compliance process whenever they engage in transactions involving the sale or financing of vehicles. OFAC, the Office of Foreign Assets Control, administers and enforces economic sanctions programs aimed at combating terrorism, narcotics trafficking, and other threats to national security. Compliance with OFAC regulations is mandatory for all businesses, including car dealerships, to prevent transactions with prohibited parties or entities.

Car dealer OFAC compliance involves screening customers and other transaction counterparts against OFAC’s list of Specially Designated Nationals (SDNs) and Blocked Persons. This screening should be conducted at the time of sale, lease, or financing to ensure that the transaction does not involve individuals or entities subject to OFAC sanctions.

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Car dealerships should integrate OFAC compliance into their overall anti-money laundering (AML) and know-your-customer (KYC) procedures to detect and prevent potential violations. Implementing robust internal controls and training programs is essential to ensure that employees understand their obligations and responsibilities regarding OFAC compliance. By conducting OFAC checks as part of their compliance process, car dealerships can mitigate the risk of engaging in prohibited transactions and avoid potential penalties and reputational damage. It demonstrates a commitment to ethical business practices and regulatory compliance, fostering trust and confidence among customers and stakeholders.

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