Written by Andy Morrise
Updated on May 4th, 2023
Table of Contents
Audience: Loan Servicer or Collector, Upper Management Team, Loan Servicing/Collections Managers, Compliance
General Information
The Office of Foreign Assets Control (OFAC) is a department within the U.S. Treasury that regulates and enforces economic and trade sanctions based on US foreign policy. The OFAC compliance test is a mandatory test that checks a customer’s identifying information against the specially designated nationals (SDN) list to make sure that it is legal to give the customer a loan.
Running an OFAC test in LoanPro can be done in a few quick and easy steps. For more general information about the test and the steps to take following a positive match, check out our article OFAC Compliance.
Compliance Use Case
Use Case: Running an OFAC/Staying Compliant
The Problem
A lender with a mid-sized portfolio is originating 50 loans a week. Their underwriting procedures are doing a good job of selecting the right borrowers, but last week they discovered that a loan was given to an individual who is on the U.S. list of Specially Designated Nationals (SDNs). They are concerned about penalties and future compliance.
LoanPro's Solution
LoanPro's OFAC compliance test gives a single-button-click check of any borrowers information against the SDN list throughout the life of the loan. If you are funding through LoanPro, this can easily be done previous to sending loan funds. If a customer has multiple loans, their test result is recorded in their profile across all of their loans, so you only have to run the test once. This not only significantly reduces the time an employee spends per check, but it also ensures that the lender is staying compliant with OFAC regulations.
What's Next?
After completing the OFAC test, it is important to verify a customer's address and know their risk as a borrower. LoanPro has a variety of tools that support this process, which you can read more about in our Customer Tools article.
If you're interested in learning more about compliance, you can read our Compliance articles that cover a variety of loan-related regulations. We recommend reading Which Laws do Lenders Need to Comply With? for a summary of some major federal, state and foreign laws to be aware of.