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February 2008 Issue
RentGrow "In the Know"
Understanding OFAC - What You Need to Know
There’s no doubt about it: there’s a lot of confusing information out there today about OFAC. So what exactly is it, and what does it mean for you, as a property manager? We’ll provide you with the information you need to answer that question, starting with the most basic definition.
OFAC, or the Office of Foreign Assets Control, falls under the United States Department of the Treasury. According to its website, OFAC "administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction."
In order to support this mission, OFAC maintains and regularly updates a Specially Designated Nationals (SDN) list. According to the OFAC website, these individuals’ "assets are blocked and U.S. persons are generally prohibited from dealing with them."
Liability & the Law—Why You Should Care About OFAC
Probably the most important point to consider is this: with increased attention on the Patriot Act and concerns about money laundering and terrorism, property owners with federally guaranteed mortgages could be in default of their mortgage if they "knowingly" permit anyone to live on the property who is named on the SDN list of terrorists, drug kingpins, and money launderers.
While the definition of "knowingly" will, no doubt, cause debates in legal circles, we find that most property owners with federally guaranteed mortgages prefer to err on the side of caution. OFAC screening helps ensure that owners are in compliance with their mortgage terms.
Screening Solutions—How OFAC Works at RentGrow
That’s why the best solution is simply to have a system in place that incorporates OFAC screening into your everyday screening processes. At RentGrow, for example, we offer OFAC searches at no additional charge on all applicants run through TotalScreen. Unlike other similar services, our search also checks against the FBI Most Wanted database (some call it the "fugitive list").
Keep in mind that OFAC is a name search only; just because a "hit," or name match comes back doesn’t mean the applicant is involved in terrorist plots or narcotics trafficking. Determining whether a hit is valid involves a number of "due diligence" steps as outlined on OFAC’s website. RentGrow’s first step is always to crosscheck results to confirm an individual’s identity (again, free of charge). Properties only need to contact us with their request, and we can typically complete the process in one business day.
If for any reason we’re unable to definitively exclude an applicant, we will work with you to resolve the situation. Rest assured, valid, positive hits are extremely rare, while "false positives" can certainly be more common since this is, as we mentioned above, a name search only.
While relatively new and certainly not foolproof, an OFAC search can provide additional peace of mind to property owners with regard to meeting the terms of financing documents. If you have additional questions about OFAC screening, please don’t hesitate to contact us. | 
