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What do I do if a person tries to open an account and the person's name is on OFAC's SDN list? Do I open the account and then block the funds?
A U.S. bank cannot open an account for a person named on the SDN list. This is a prohibited service. However, you should pay careful attention to be sure the person trying to open the account is the same person as the one named on OFAC's list. In many cases you may get a 'false positive,' where the name is similar to a target's name, but the rest of the information provided by the applicant does not match the descriptor information on OFAC's SDN list. If the bank does come into the possession or control of any property in which a blocked person has an interest, it is obligated to block that property. In other words, if you receive an application to open an account from a person who matches the information on the SDN list, together with an opening deposit, you are obligated to block the funds. The same is true for other banking transactions. If, for example, a customer asks if he or she is allowed to send money to a relative's account with Bank of Khartoum in Sudan, the bank can say 'no, that's illegal.' If, on the other hand, a bank receives instructions from its customer to debit his or her account and send the funds to Bank of Khartoum, the bank must act on the instructions by blocking the funds which contain a future interest of the Sudanese SDN bank. You might think of the analogy of a bouncing ball. Once the ball starts moving, you must stop it if it comes into your possession.
Office of Foreign Assets Control (OFAC), U.S. Treasury Department
http://www.treas.gov/offices/enforcement/ofac/
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