In brief:
- The US Financial Industry Regulatory Authority (FINRA) previously had a search tool for matching entities against sanctions lists from the US Office of Foreign Assets Control (OFAC). As of January 2023, the tool is no longer accessible.
- FINRA still has the authority to make and enforce rules regarding how US investment brokers and dealers conduct business. To this end, it allows for searching and browsing actions it has taken against rulebreakers. This may be useful information for an organization’s risk team when vetting potential clients or partners, whether they’re individuals or other business entities.
- The US Department of the Treasury has its own official search tool for checking entity names against OFAC’s sanctions lists. However, there are more efficient solutions out there, such as Middesk.
The US Financial Industry Regulatory Authority, or FINRA, is a private but government-supervised corporation with a mission to promote fairness and transparency in the US investment industry. Part of that mandate is providing information and resources to help investors protect themselves.
Previously, that included a tool that allowed for checking individual, group, and territory names against entities on watchlists from the US Office of Foreign Assets Control (OFAC). This collaboration between FINRA and OFAC helped US investors avoid legal penalties and unnecessary risks from dealing with entities OFAC designated as criminal.
However, FINRA’s OFAC search tool has been retired. We’ll help you find the best alternative by covering the following:
Let’s get right to it.
Prior to January 3, 2023, FINRA had an OFAC check tool that allowed searching for entity names on the US Department of the Treasury’s sanctions lists. The tool is no longer in operation, however. Instead, there is an official tool provided directly by OFAC and its parent agency, the Department of the Treasury.
Though the OFAC search tool at FINRA has been retired, FINRA still allows for looking up disciplinary actions it has taken against unscrupulous investment brokers and dealers. This can still be important to risk teams at organizations, though. To explain, we’ll give a bit of background on what FINRA does (or can do) and why.
FINRA helps US businesses manage risk by acting as a self-regulatory body for the US investment industry. Supervised by the US Securities and Exchange Commission (SEC), FINRA creates rules on the ethical conduct of securities brokers or dealers. It also educates investors on their rights and responsibilities, and audits firms involved in the investment industry for compliance purposes. Its overall aim is to create a fair marketplace for US investors.
In addition, though not a government agency like OFAC, FINRA is authorized by the US government to take disciplinary actions against brokers and dealers that violate its rules. These actions can include levying fines, ordering restitution for investors, issuing suspensions or bans, or referring cases to the SEC or other US government agencies for criminal prosecution.
Information on these actions can be searched for at FINRA. This can be helpful for an organization in assessing the potential risks associated with an individual or business entity as a client, partner, or business owner.
FINRA publishes records of disciplinary actions against US investment brokers and dealers. These may have been taken by FINRA itself, or by the SEC or other US government agencies when FINRA referred cases to them. The records can be found through these tools and lists:
- Disciplinary Actions Database: A tool that allows for searching for information on disciplinary actions FINRA has issued since 2005. For actions that were appealed, records will also include opinions from the SEC and federal appellate courts.
- Monthly Disciplinary Actions: A database of written monthly reports outlining disciplinary actions taken by FINRA against financial professionals and businesses. It currently contains records as far back as from February of 1996.
- Individuals Barred by FINRA: An alphabetically-sorted table that lists individuals (including their CRD number) who have been permanently banned from FINRA, including any association with any of its registered members. It contains records as far back as August of 1999. Each record contains a link to the monthly disciplinary action report that explains the decision.
- Actions Resulting From FINRA Referrals: A table outlining cases of violations of FINRA’s rules that FINRA referred to the SEC and other government authorities. It contains records from August 2014 onward. Each entry contains a link to further information about the case, as well as links to supporting documents (complaints, orders, etc.) where applicable.
These resources can be useful for organizations in researching potential (or current) clients and partners. They can help organizations determine if individuals or businesses they’re in contact with have been caught engaging in risky or illegal investment activity by FINRA (or other US authorities).
However, these disciplinary action reports are not a replacement for the FINRA OFAC screening tool. OFAC’s sanctions lists outline people, groups, and even territories that the US government has outlawed (or at least restricted) any sort of dealings with—and that goes beyond relationships related to investments. So organizations will have to find another way to get this information. We address that next.
The closest thing now to a FINRA OFAC search is OFAC’s own official sanctions list search tool. But this tool is not very efficient for screening names of individuals, businesses, and/or territories at scale, since it is meant to perform only one search by a user at a time.
OFAC does offer its Specially Designated Nationals (SDN) List and Consolidated Non-SDN Lists as downloadable files for use with automated screening software. Here are some popular programs that can make use of these lists, or that can automatically search OFAC’s sanctions lists (and other watchlists).
1. Middesk
Middesk is integrated directly into US government data sources to screen individual, business, and territories against all OFAC sanctions lists. That includes the SDN List as well as all lists on the Consolidated Non-SDN List. Middesk can also screen against sanctions lists from other US government agencies, such as the Bureau of Industry and Security (BIS) and the State Department. The information is refreshed daily, so organizations can find out about any changes to the watchlists on a regular basis.
Middesk can also retrieve other information about businesses that’s critical for verifying identities and assessing B2B relationship risks. These include registration information (such as tax identifiers), industry classification, adverse media screening, web presence, formation document copies, litigation histories, and more.
2. LSEG Data & Analytics
Formerly known as Refinitiv World-Check, this identity verification platform allows for searching OFAC sanctions lists and many other watchlists. It comes with pre-built profiles on millions of individuals and businesses for in-depth historical analysis. It can also screen for politically exposed persons and adverse media coverage.
It’s rather expensive, though, and smaller businesses may not need all of its features anyway.
3. Oracle Financial Crime & Compliance Management Cloud Service
Oracle FCCM is an enterprise-level anti-financial crime system that can search OFAC sanctions lists using advanced features. These include data pre-preparation, name matching algorithms, threat prioritization, and auditing auto-documentation. Oracle FCCM can also screen many other watchlists and other pieces of information critical to business verification.
However, all of those features require well-trained staff and heavy-duty hardware to use. They also come with a steep price tag. So this platform is only meant for the biggest of businesses.
4. Dow Jones Risk & Compliance
Dow Jones specializes in financial and economic information. So its business verification tools are perfectly capable of finding out who’s dangerous or illegal for US organizations to do business with—in other words, which entities are on OFAC’s sanctions lists. They also include advanced features such as risk scoring and ongoing monitoring.
Dow Jones R&C is a rather expensive option, though. In addition, some of its features have to be purchased separately (such as Factiva, its adverse media screening tool) and/or just may not be needed by smaller businesses.
5. Ondato
Ondato’s specialty is verifying the identities of individuals and businesses through photos, videos, or manually-uploaded documents. In addition to this, it can also check identities against watchlists, such as those issued by OFAC.
However, its data coverage can be limited for watchlists in certain parts of the world. It also has other basic business verification functions, but some advanced features must be purchased separately as add-ons.
Middesk lets your organization search OFAC sanctions lists, other US watchlists, and more risk-related business information
Organizations seeking client or partner relationships should avoid entities on OFAC’s sanctions lists, as they are illegal—or at least very risky—to associate with. However, just because an entity isn’t on OFAC’s lists doesn’t mean it’s not still too risky for an organization to form or continue a relationship with. There are other risk indicators for a business—as well as its owners—that an organization must consider before making a final decision.
Middesk’s Business Verification solution is designed to gather all the information an organization needs to verify the identity of a business (and its owners, via an integration with Socure) and assess the risks of a relationship with it. That includes registration information, watchlist screening, legal proceeding details, and more. Plus, with Middesk’s Business Underwriting solution, an organization can find lien filings and other information that can indicate financial risks in partnering with a business.
To learn more about one or both of these tools, get in touch with our sales team.
