How to Choose the Best OFAC Screening Software for KYB

In brief: 

• OFAC screening software helps US organizations check whether people, groups (including other businesses), or territories are listed on sanctions lists published by the US Office of Foreign Assets Control (OFAC). This, in turn, tells the organization if said entities are illegal (or at least high-risk) to establish or continue relationships with.
• OFAC sanctions screening software should get data from official government sources (or at least trustworthy third parties), be able to match names using fuzzy logic, allow for choosing which particular watchlists to screen, and update data regularly to facilitate continuous monitoring.
• Middesk also screens other US sanctions lists, with data refreshed daily and direct from government sources. It can also provide other information necessary for verifying business identities and risk profiles.

To support US national security and foreign interest, the Office of Foreign Assets Control (OFAC) publishes watchlists of people, groups, and territories involved in highly illegal or dangerous activities. US organizations need to refrain from forming business relationships with the entities on these lists in order to avoid criminal penalties and other risks.

But organizations tend to have many clients and partners (current and/or prospective), and checking them one-by-one against each of OFAC’s lists often takes up too much time. Most companies rely on screening software to automate checks and save resources for other functions.

This article goes over features effective OFAC screening solutions should have, and introduces some popular OFAC screening vendors.

We’ll first talk a bit more in depth about what OFAC interdiction software is, and why organizations (should) use it.

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OFAC screening software refers to software that can match the names of people, groups, and territories against those listed on sanctions lists issued by the US Office of Foreign Assets Control (OFAC). These lists indicate entities the US has restricted or forbidden commercial relations with.

OFAC publishes several different sanctions lists. The most important of these is the Specially Designated Nationals List, or SDN list. Most others are summarized within the Consolidated Non-SDN Sanctions List.

Why OFAC compliance software is essential for business verification

OFAC sanctions screening software is a critical part of KYB and KYC compliance for US-based organizations. It helps organizations avoid dealing with people or groups deemed criminal (or at least risky) by the US government. That includes business owners, as well as people and groups in countries that have been sanctioned.

This is especially so when an organization may have hundreds or thousands of clients and/or partners. That makes having to check each entity’s name (and home territory) against OFAC’s lists one-by-one far too taxing on time and other resources. 

OFAC compliance software makes the process much faster by offering an instant OFAC search of all (designated) lists at the same time. This also reduces human error by ensuring all relevant lists are automatically screened against in a systematic way.

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So how specifically are OFAC screening solutions able to provide faster and more accurate results than manual screening? Here are five key capabilities they should have.

Fuzzy name matching

Not all searched-for names of people or groups may be exactly how they are listed in OFAC’s lists. Some may be aliases, alternate spellings, or alternate (middle) names. Others may have been entered incorrectly, and so contain typographical errors.

OFAC check software should be able to process partial matches for names to compensate for the above issues. Ideally, it should have adjustable settings to allow for strict matching when an organization is trying to minimize false positives, and looser matching when the organization is trying to be as risk-averse as possible.

Custom watchlist selection

An organization may not consider certain OFAC watchlists to be relevant to it. This could be based on what industry the organization’s in or where it conducts business, or other factors affecting its overall risk appetite.

Of course, an organization could screen against all OFAC watchlists. But this may cost time and API fees the organization would rather not spend. OFAC software that allows for selecting specific watchlists to screen against can save an organization resources by letting it check only what it needs to.

Middesk uses identity matching tools to ensure that entities are properly screened against watchlists. Choose which watchlists you need to manage to mitigate your operational workload. We also offer Global Watchlist screening as part of our Enhanced Screenings package to expand coverage.

Fresh data and ongoing monitoring

OFAC’s sanctions lists aren’t static; entities are added to them (and removed from them) on a regular basis. To avoid criminal penalties and operational risks from sanctions non-compliance, organizations need to become aware of these changes with as much consistency as possible.

That’s why organizations should ideally opt for solutions that refresh their data at frequent and predictable intervals. They should also look for software that offers ongoing OFAC monitoring, in order to alert them of changes that may affect prospective or current relationships with clients and partners.

Middesk gets data directly from relevant watchlists daily so you can trust that your data is fresh and accurate. We also regularly monitor for changes to entities on watchlists, and update our records accordingly.

Integration with official or reliable sources

Ideally, OFAC monitoring software should get its data directly from OFAC or a related government agency to ensure that data is a final source of truth. Data freshness is crucial, and each regulatory agency has their own cadence for updating their watchlists. Having a solution that pulls data directly from these government agencies is the best way to ensure data accuracy and freshness.

Middesk integrates directly with official government agencies, such as State of Secretary offices. With direct integration with SOS data in every state, Middesk offers the freshest, most accurate data available for business verification.

Instant OFAC search

The more time it takes to get the actual information back from a risk-related information request (such as an OFAC search), the more friction it adds to your CDD procedures. Your business customers don’t want to be left waiting around to find out if they’re approved to become (or stay) your customers or partners.

You should also want to not keep them waiting for your company’s own sake. The faster you can screen business customers for CDD, the more of them you can manage and the more time you have to move on to other priorities. So get a tool that allows for an instant OFAC check to be able to make risk assessments faster and keep the CDD process moving.

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While it’s possible to search and download OFAC’s SDN list or Consolidated Non-SDN Lists, doing so manually for large numbers of clients and partners is inefficient. There is also a tool called Instant OFAC that can conduct searches; however, it has even more limited search capabilities and has not been updated for several years.

Instead, here are the best options for automated OFAC screening.

Middesk

Best for: Functional, customized US watchlist screening

Middesk is capable of screening entities against all OFAC lists, including the SDN list and all other non-SDN lists. It supports fuzzy name matching, date of birth filtering (for individual people), and custom watchlist selection. It also allows for selectively searching watchlists from other US federal agencies, such as the Bureau of Industry and Security (BIS) and the State Department—all directly from government sources, and with data refreshed daily.

Middesk can also screen for other information on businesses that could indicate higher or lower risk in a B2B relationship. That includes industry classification, adverse media coverage, litigation histories, and more.

Ondato

Best for: Precision identity matching

Ondato provides several different methods of identity verification: photo-based biometrics, video-based liveness detection, and manual document scanning. This makes it easier to more accurately identify entities and check them against watchlists, including those published by OFAC.

However, several of Ondato’s other compliance-related features must be purchased separately, which can make it expensive. It may also have limited sanctions data on certain parts of the world.

Dow Jones Risk & Compliance

Best for: OFAC and other watchlist screening across multiple industries and jurisdictions

Dow Jones is a well-respected financial information publisher, and it has also expanded its offerings into anti-financial crime compliance tools. Leveraging its trustworthy data, it can check entities against OFAC lists as well as many other watchlists. It also contains features for assessing business relationship risks, as well as monitoring watchlists on an ongoing basis.

Except for enterprise-level organizations with wide and varying markets, though, this solution likely has more features than a typical business will need. Not to mention it’s expensive, especially if Factiva—Dow Jones’s adverse media screening tool—is also desired.

Oracle Financial Crime & Compliance Management Cloud Service

Best for: Enterprise-level watchlist screening

This total out-of-the-box anti-financial crime compliance solution contains many desirable functionalities for screening OFAC sanctions lists and other watchlists. These include data pre-cleaning, name matching algorithms, risk scoring, real-time watchlist monitoring, and activity documentation for auditing & compliance.

It’s meant mainly for the biggest of businesses, though, as it’s very pricey, complicated to use, and demanding in terms of hardware requirements.

LSEG Data & Analytics

Best for: Broad data coverage for checking OFAC and other watchlists

This was previously a well-respected watchlist screening solution called Refinitiv World-Check. Now owned by the London Stock Exchange Group, it’s still a top-level screening tool. It has millions of records on people and groups, and it can check them all against OFAC lists, other sanctions lists, and other watchlists (such as politically exposed persons and adverse media coverage).

Again, though, it may not be worth its steep price point if an organization isn’t going to use all of its extra features.

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Cover OFAC and other US sanctions watchlists with Middesk

OFAC sanctions screening is just one part of verifying that a business (or business owner) is safe to have a professional relationship with. An organization needs to make sure a business and its owners have correct registration details, and don’t pose unacceptable levels of risk to the organization due to their circumstances.

To help with this, Middesk can also pull other data useful for assessing risk in B2B relationships. That includes industry classification, adverse media coverage, web presence samples, litigation/bankruptcy histories, and more. 

‍Talk to our sales team about how we can help your organization achieve compliance with not just OFAC, but also other applicable laws and regulations.