Doing business with someone on a watchlist maintained by an obscure Treasury Department bureau could land you in the slammer for up to 30 years. Not to mention subjecting you to a US$5 million criminal fine, or a civil penalty of up to US$1 million per incident.
Any property "involved in" a transaction with
someone on the watchlist t can be frozen. If your assets are frozen, you must
apply for a "license" (exemption) to recover them. It can take Treasury Department years to
process a claim.
Welcome to the secret world of the Treasury's Office of Foreign Assets Control (OFAC). Its watchlist of suspected terrorists, narcotics traffickers, and other “specially designated nationals" contains more than 6,000 names. (You can download the 250-page list from OFAC's Web site at http://www.ustreas.gov/ofac.)
Those 6,000 names are just the beginning. OFAC also administers and enforces economic and trade sanctions against more than a dozen countries, under executive orders declared under Presidential wartime and national emergency powers, as well as specific legislation.
Deal with any targeted person, entity or country, and you face similar sanctions. Nor is there any threshold; in theory, selling a glass of lemonade to someone on the list could land you in jail for 30 years. The government's refusal to limit the application of OFAC sanctions to specific industries or transactions makes this conclusion inescapable.
Of course, the penalties aren't generally this harsh. For instance, just last month, Guidant Corporation of Indiana paid OFAC US$277,017.00 in a civil settlement because it allegedly sold medical equipment that wound up in Iraq and Iran, in violation of OFAC regulations.
Not wanting to subject themselves to draconian penalties, businesses nationwide are racing to install "OFAC compliance software" to screen scheduled transactions against OFAC targets. Since the software often flags partial name matches, you could still be identified as a potential terrorist, based on your first, middle, or last name.
As a result, an increasing number of people—predominantly men with names like "Hassan" or "Mohammed" are being denied the opportunity to open a bank account, obtain health insurance, buy a home, rent an apartment, or find a new job.
A Sacramento resident whose first and middle names are "Mohammed" and "Ali" found this out the hard way. He contacted a local Western Union agent to collect a $50 funds transfer. For three days, Western Union told him that it couldn't find the record. Then, an employee told him he couldn't get the money because he “had a Muslim name.” While Mr. Ali finally got his money, his first and middle names remain on the OFAC watchlist, so there's no guarantee his ordeal won't be repeated again and again.
Like the other U.S. government watchlists I've written about, this one OFAC administers is basically useless. One screening of 6 million names in a health insurance company's database against the OFAC list resulted in 6,000 false positive matches—and not one real match.
If OFAC's watchlist isn't effective at identifying suspect terrorists, what is it good for? I suspect one thing it's effective at is to keep people with names like "Mohammed" out of the United States, and to encourage them to leave if they're already here. And perhaps, at it's root, that's what the watchlist is really designed to do.
(For more information on emergency financial controls administered by OFAC and other government agencies, click here.)
Copyright © 2007 by Mark Nestmann
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