OFAC compliance
OFAC compliance. OFAC (Office of Foreign Assets Control) is a Treasury agency that administers U.S. economic sanctions. OFAC compliance for a Part 142 training center means screening every international counterparty against OFAC sanctions lists (SDN, Sectoral, Non-SDN) before accepting payment, and flagging any match for human review.
Definition
Sanctions screening is the most overlooked compliance line at Part 142 centers that take international wire payments. Accepting payment from a sanctioned entity — even unknowingly — is a strict-liability violation. The OFAC Specially Designated Nationals (SDN) list is the primary list, but there are several others (Sectoral Sanctions, Non-SDN Palestinian Legislative Council, etc.). Modern compliance tooling screens against all of them automatically.
Screening at onboarding + per-transaction
OFAC screening should happen twice: when a new client account is onboarded (against the entity name, address, and beneficial owners) and at every transaction (against the wire sender). Lists update frequently — screening only at onboarding misses entities that get added later.
False-positive handling
Common names produce false-positive matches (e.g., "John Smith"). A reasonable system surfaces matches with confidence scoring and lets the compliance officer disposition each one explicitly. Auto-rejecting on any match is too aggressive; ignoring matches is non-compliance.
Documentation requirements
For each transaction, retain: the screening result, the lists screened against, the timestamp, and the compliance officer's disposition for any match. 5-year retention applies under most relevant guidance.
See also
- BSA / FinCEN CTR — FinCEN CTR
- IRS Form 8300 — IRS Form 8300
- SWIFT wire UETR — SWIFT UETR
Roffik's take
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