The Office of Foreign Asset Controls requires car dealers to check customer names against a database of known dangerous organizations and individuals. Basically OFAC is a government agency, which maintains a list of people and groups that have ties to organized crime, drug trafficking, terrorism, and other illegal activities.
Auto dealers, along with many other types of businesses which conduct credit checks and make major transactions, must check that potential customers have not been flagged by OFAC. This is done by comparing the customer’s name against the Specially Designated Nationals and Blocked Persons (SDN) list.
Unlike some other forms of customer data and research, dealers do not have to inform customers that they are being checked against the OFAC SDN list. No authorization is needed from the customer. In fact, trying to explain OFAC and the compliance process to the average car buyer would likely be unproductive.
OFAC compliance is generally achieved during the credit check process, and many credit bureaus and software applications will automatically check applications against the SDN list. However, automotive managers should not take for granted that this is happening by default. You must be completely sure that all customers are being checked for matches to the current SDN list. You must also explain to employees what to do should a customer match a name on this list.
Compliance with OFAC is one of the most important processes to be sure you’re doing correctly, because the penalties for compliance failure can be enormous. This is not just a case where a customer might be getting unclear lending information - failing to comply with OFAC means you could literally be selling cars to terrorists.
If you’re not sure that your dealership is in compliance with OFAC, you need to implement a compliance audit immediately.