Management commitment
Senior management approves the program, funds it, and gives the compliance officer real authority.
OFAC sanctions compliance
Every alert gets a disposition you can defend.
OFAC compliance is not optional for any dealer. Sanctions rules apply to every U.S. person, whether or not the BSA treats your business as a dealer, with no size exemption, no dollar threshold, and no intent requirement. What protects you is a screening process that works and a record that shows how each possible match was resolved. Technology makes that achievable for a small team.
FrameworkOFAC, May 2019
Five components, applied to a dealer
OFAC's Framework for OFAC Compliance Commitments sets out what it expects of a sanctions compliance program. We build each component around how metal actually moves through your business.
Risk assessment
A review of your touchpoints with the outside world: customers, suppliers, refiners, depositories, shippers, payment channels, and the countries behind each.
Internal controls
Screening, alert disposition, blocking and rejection procedures, and recordkeeping.
Testing and auditing
Independent checks that screening runs, alerts close correctly, and records are kept.
Training
Role-based training for the people who open accounts, accept trades, and ship metal.
ScreeningSDN list · 50% rule
What gets screened, and when
- At onboarding: every customer, and every supplier or counterparty you buy metal from.
- On list updates: your existing customer base, so a customer designated after account opening is caught.
- At transaction time: payees, shipping destinations, and third parties to a payment.
- Ownership: an entity owned 50 percent or more, in the aggregate, by blocked persons is itself blocked, even when it appears on no list. Entity customers and suppliers need an ownership check, not just a name screen.
Finding a candidate match is the easy part. Deciding whether the candidate is your customer is the hard part, and it belongs to your compliance officer. RegSmart's proprietary OFAC software, designed for precious metals and jewelry dealers, builds the disposition workflow below into the tool, so every alert is worked the same way and documented. About the software →
Disposition
A tiered workflow for possible matches
Each alert moves through the tiers in order and stops at the first one that resolves it. The disposition memo names what was compared, which source it came from, and why the result follows.
Tier A
Structural exclusion
The list entry cannot be your customer on its face. For example, the entry is a vessel or an organization and your customer is an individual.
Tier B
Identifier contradiction
Data you already hold contradicts the entry: a different date of birth, a different identity document number, or a different nationality. One clear contradiction is enough to clear the alert.
Tier B + EDD
Contradiction found through enhanced due diligence
Your file is too thin to clear the alert, so you request a government-issued ID or run third-party identity verification, and the contradiction comes from that new information.
Tier C
Escalation to OFAC
The list entry has too few identifiers to compare, and ID and verification steps cannot resolve it. The case goes to OFAC through its web-based compliance hotline.
Confirmed match
Block and report
Block the property immediately, file the initial blocking report within 10 business days, and include it in the annual report of blocked property due each September 30.
Closed
Unresolved, closed on business grounds
A customer who will not provide ID can have the account closed and funds returned as a business decision. That refusal is not, by itself, an OFAC finding.
Blocked metal31 CFR 501.603
What happens to metal when an account is blocked
It stays where it is
Blocking is not seizure. Title does not change, but no one may transfer, sell, deliver, or pledge the metal without an OFAC license. Under the regulations of the sanctions programs, holding blocked tangible property creates no duty to sell it.
Cash is treated differently
Blocked funds generally must be held in an interest-bearing blocked account at a commercially reasonable rate, under the specific program's regulations.
Ordinary fees may continue
Many programs authorize debiting a blocked account for normal service charges, which can include custody fees. The authorization is program-specific, so confirm it against the designation behind each block.
Custody needs coordination
When a depository holds the metal and you hold the customer relationship, each of you may have independent obligations. Your agreement and your procedures should say who freezes, who reports, and who holds records.
Reporting
Deadlines and records
| Obligation | Deadline | Rule |
|---|---|---|
| Initial blocking report | Within 10 business days of blocking | 501.603(b)(1) |
| Annual report of blocked property | By September 30 each year, for as long as the block lasts | 501.603(b)(2) |
| Rejected transaction report | Within 10 business days of rejecting | 501.604 |
| Recordkeeping | 10 years from the transaction (5 years before March 21, 2025) | 501.601 |
A blocking report filed for a match under certain terrorism or narcotics programs can satisfy SAR reporting for that same transaction. That relief is narrow, and for dealers, SAR filing is voluntary in any case.
Have open alerts you cannot close?
We can review your queue, apply the tiers, and leave you with templates for the next one.