Delayed Payments Due to OFAC Holds - FAQ's
The United States Treasury’s Office of Foreign Assets Control (OFAC), a federal enforcement body, manages an ever-changing list of affected jurisdictions with selective or comprehensive restrictions. This article provides information about delayed payments due to OFAC holds.
Why does Cashflow360 sometimes Delay/Hold Payments?
As a registered Money Service Business, and a licensed money transmitter in 49 US States, Cashflow360 is required to comply with Federal and State regulations to help prevent its services from being used for financial crime or for sending payments to individuals, entities, or jurisdictions sanctioned by the US Treasury’s Office of Foreign Assets Control (“OFAC”). Economic sanctions are defined as the withdrawal of customary trade and financial relations for foreign-and security-policy purposes. Sanctions can be comprehensive or specific to a country, individual, or entity (e.g., businesses).
Why is my payment being held/delayed?
Your payment may be held/delayed due to one or more parties related to your financial transaction being a close match to an individual/entity listed on the OFAC Specially Designated Nationals (SDN) list, or being potentially located in a sanctioned jurisdiction. This doesn't definitively mean that parties to your transaction are sanctioned entities. Additional information may be required to make this determination.
How do I get my payment released?
If you receive a notification that your payment has been delayed, Cashflow360 will require additional information on one or more of the parties on the transaction, such as identification records, to confirm the identity of the party/parties. Your payment will be released if such information shows that the party/parties is/are not those on the sanctioned list. It's very important that you promptly respond to any request for additional information to prevent further delays to your payment or disruptions in future payments.
What happens after I provide information?
Cashflow360 will review the information provided to determine if the transaction party/parties is/are the actual subject(s) of imposed sanctions. If the payment is delayed by one of Cashflow360’s processing banks, the information is passed to the bank in question to review. If Cashflow360 or the processing bank determines that there's no match, the payment will be released. However, if Cashflow360 or its processing bank determines the party/parties is/are a match to a subject on the SDN list, then your payment will either be rejected or blocked (i.e. “frozen”) and reported to OFAC.
*A SDN list is a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that aren't country-specific. Collectively, such individuals and companies are called “Specially Designated Nationals” or “SDNs.” US persons, including individuals and entities such as Cashflow360, are prohibited from dealing with SDNs including facilitating payments to or on behalf of SDNs.
What happens if my payment is blocked?
If your payment is blocked by Cashflow360 or its processing bank, you have the right to apply for a license with OFAC to unblock and release the funds. A license is an authorization from OFAC to engage in a transaction that otherwise would be prohibited. To apply online to have the funds released, you can visit: https://home.treasury.gov/policy-issues/financial-sanctions/ofac-license-application-page. If you have any questions about the application process, you can also contact OFAC's Licensing Division at (202) 622-2480.
Transactions will be blocked if a party on OFAC’s SDN (Specially Designated Nationals) List has an interest in the transaction.
What can I do to prevent payments from being held?
To minimize the possibility of your payments being held or delayed, the following is critical:
- Do not send payments to sanctioned individuals, entities, or jurisdictions.
- Always ensure you enter complete and accurate information on your vendors including full names and addresses.