You are required to personally perform all of these steps for each client and potential client, for each of its relevant related parties and for each adverse party in a matter and report results as required in the CM Handbook and CM OFAC/Sanctions Guide when completing your Conflict Check form. For potential clients/new matters, attach your due diligence evidence (e.g., screen shot of OFAC search as described in Step 2) to the Conflicts Check form in space provided on that form. For annual OFAC checks (or those done during restructuring of a client), file a copy of your due diligence evidence in the DMS under PARTNER RESOURCES/OFAC/Partner Filings. If any factors below indicate ELEVATED RISK, the matter should be reviewed by the OFAC Screening Committee. If you are unsure about how any of the steps below apply in your particular set of circumstances, discuss with OFAC Screening Committee as soon as possible by sending a query to email@example.com.
Culhane Meadows OFAC Sanctions/Due Diligence Process
STEP 1: Identify the Party (Identity Risk).
– Use reasonable efforts to gather identifying information (e.g., legal name, location of incorporation, ownership) about clients, potential clients, adverse parties.
– Identification can be done through information received from the client/potential client or by independent source (e.g., Google).
– If the party is not either publicly well known or specifically known to you, verify the information received from client through online searches.
– For clients/potential clients (not for adverse parties): also identify and screen any persons that hold 50% or more (directly or indirectly), unless the client/potential client is publicly or widely held.
Assess the risk:
If a party falls within one of the following categories, then the party is considered a LOW IDENTITY RISK and no further screening steps are needed for that party:
- a well known public or widely held company based in the US, Canada, UK or EU (e.g., American Express, Morgan Stanley, British Petroleum); or
- are exclusively US citizens (if individuals) or exclusively owned by US citizens (if an entity) and the work that CM will perform for party will be exclusively related to the US, Canada, UK or the EU; or
- a government entity based in the US, Canada, UK or EU; or
- a bank or other deposit institution that is licensed by a US federal banking regulator (Note: federal bank license can be checked HERE).
If you cannot gather enough identifying information about a party after reasonable efforts or have suspicions about the identity such that a low risk cannot be determined, report the party as ELEVATED IDENTITY RISK and continue with the remaining steps.
STEP 2: Check the Names (OFAC Search Risk).
– Go to the OFAC sanctions search. In the box “Name”, enter the last name of individuals or the corporate name or entities (without extensions such as LLC).
– Adjust the “minimum name score” to 90.
– Do not change any other default settings, which should be set to search “All” sanctions lists.
– Click on the “search” button.
– For all clients/potential clients (not adverse parties): repeat for beneficial owners of more than 50% (if party was classified as ELEVATED IDENTITY RISK in Step 1).
Assess the risk:
If the search returns “0 results”, continue to Step 3. If the search returned results for any searched names that look like they might be potential matches or that you cannot reasonably rule out, report the name as ELEVATED OFAC SEARCH RISK. Continue through all remaining steps to identify any additional reasons for elevated risk.
STEP 3: Check the Location (Geographic Risk and Residual Risk).
– Identify the location of incorporation for the entity we are representing (or their main offices if you know one of them it outside the U.S.).
– If the party is an individual, identify citizenship and country of residence.
– Identify the countries that will be involved in the matter.
Assess the risk:
If the party satisfies all of the following, then this party is considered a LOW GEOGRAPHIC RISK and no further screening steps are needed for that party:
• the party is incorporated and based in US (or a US citizen); and
• at least 51% of the beneficial owners of the party (if the party is not publicly or widely held) are US incorporated and based (or US citizens) – this is for clients only (don’t need to dive this deep into ownership percentages for adverse parties); and
• the work that CM will perform will be exclusively related to the US, Canada, UK or EU.
Report a party as ELEVATED GEOGRAPHIC RISK if the party is incorporated in, based in or a citizen of any of the following countries, or if the work that CM will perform is related to any of the following countries (NOTE: this list is subject to change from time to time as required by OFAC):
Central African Rep.
Democratic Rep. of Congo
Sudan and Darfur
Ukraine / Crimea
If you cannot gather location information after reasonable efforts on a party or if none of the above LOW GEOGRAPHIC RISK categories apply, report the party as ELEVATED RESIDUAL RISK
STEP 4: Identify other Mitigating Factors for Consideration by OFAC Screening Committee.
If you have identified a party as “elevated risk” through the above steps, determine whether any of these mitigating factors apply:
• the party is regulated as a bank or similar institution in Canada, UK or EU; or
• the party is “adverse” and the work that CM will perform related to this party is limited to adversarial work (e.g., sending a cease and desist letter for trademark violation, litigating a claim against). If this work turns from adversarial to cooperative (such as a licensing agreement), recheck the matter; or
• the party is known to be a client of a well known law firm in the UK or EU (or another jurisdiction where laws require lawyers to obtain copies of passports and other identifying AML information) or of an AmLaw 100 law firm in the US; or
• the party is well known to the OA through long association; or
• the party is a government authority or state run enterprise; or
• you have actual knowledge that the party has been screened for compliance with Sanctions Laws by another trusted party (e.g., an existing CM client).
Report all of the above that are applicable to the OFAC Screening Committee in the “Mitigating Factors” box provided in Conflicts Check forms for potential clients/new matters.