24/7 call for a free consultation 212-300-5196

AS SEEN ON

EXPERIENCEDTop Rated

YOU MAY HAVE SEEN TODD SPODEK ON THE NETFLIX SHOW
INVENTING ANNA

When you’re facing a federal issue, you need an attorney whose going to be available 24/7 to help you get the results and outcome you need. The value of working with the Spodek Law Group is that we treat each and every client like a member of our family.

Client Testimonials

5

THE BEST LAWYER ANYONE COULD ASK FOR.

The BEST LAWYER ANYONE COULD ASK FOR!!! Todd changed our lives! He’s not JUST a lawyer representing us for a case. Todd and his office have become Family. When we entered his office in August of 2022, we entered with such anxiety, uncertainty, and so much stress. Honestly we were very lost. My husband and I felt alone. How could a lawyer who didn’t know us, know our family, know our background represents us, When this could change our lives for the next 5-7years that my husband was facing in Federal jail. By the time our free consultation was over with Todd, we left his office at ease. All our questions were answered and we had a sense of relief.

schedule a consultation

Blog

Auditing and Testing Your OFAC Compliance Program

March 21, 2024 Uncategorized

Auditing and Testing Your OFAC Compliance Program

Having an effective OFAC compliance program is crucial for any company doing business in the United States. OFAC (Office of Foreign Assets Control) administers and oversees U.S. economic and trade sanctions programs. Failing to comply with OFAC regulations can result in stiff civil or criminal penalties, so it’s important to have robust policies and procedures in place.

A key component of any successful OFAC compliance program is conducting regular audits and testing. Audits provide an objective assessment of how your OFAC compliance program is functioning and meeting regulatory requirements. Testing then helps validate that your policies and procedures are being properly implemented and working as intended.

In this article, we’ll explore best practices for auditing and testing your OFAC compliance program to ensure you stay in compliance and avoid potential enforcement actions.

Conducting OFAC Compliance Program Audits

OFAC recommends formal audits be conducted at least annually for any organization with OFAC risk exposure. More frequent audits may be warranted for higher-risk companies. At a minimum, an OFAC compliance audit should evaluate:

  • The overall adequacy and effectiveness of your OFAC compliance program
  • Adherence to your OFAC policy and procedures
  • The accuracy and completeness of your sanctions screening process
  • Your response process for handling potential OFAC matches
  • Recordkeeping practices related to OFAC requirements
  • OFAC training completion by employees
  • Any compliance program enhancements needed

OFAC audits can be performed internally by a company’s compliance team, internal audit department, or outside counsel. For many organizations, hiring an external third-party firm to conduct OFAC audits can provide a fresh perspective and expertise.

Here are some tips for conducting effective OFAC compliance audits:

  • Use audit procedures tailored to your specific OFAC risk profile.
  • Select appropriate sampling sizes to generate statistically valid results.
  • Review real transaction data sets across business units and product lines.
  • Assess the accuracy of technology tools used for sanctions screening.
  • Interview frontline staff and management involved in OFAC compliance.
  • Trace sample transactions from start to finish through the compliance process.
  • Evaluate recordkeeping, escalation protocols, and quality control practices.
  • Score the audit findings objectively against a standardized framework.
  • Issue detailed reports with an overall rating and corrective action plan.

Be sure audit reports are distributed to senior management and the board. Remediation of identified OFAC compliance program weaknesses should be tracked and verified.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
Very professional, very transparent, over all a great experience
Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Conducting OFAC Compliance Testing

In addition to audits, OFAC compliance testing is essential for validating the operational effectiveness of your OFAC program. Testing should be performed periodically in between audits to confirm policies and procedures are working as designed. Key types of OFAC compliance testing include:

Sanctions List Testing

This testing evaluates whether your sanctions screening tools and processes are accurately flagging OFAC prohibited countries, entities, and individuals. Sanctions list testing methods include:

  • Test file validation – Run a sample file containing real or simulated matches through your screening system to confirm expected results.
  • False negative testing – Intentionally input known OFAC entries to confirm they generate alerts.
  • False positive analysis – Assess any false positives from production screening to find areas for improvement.
  • List change validation – Verify new OFAC list entries are loaded into your screening system correctly when updates are published.

Transaction Testing

This testing focuses on simulated transactions to confirm they are screened and handled properly according to your OFAC compliance program policies and procedures. Strategies include:

  • Underwriter testing – Submit mock OFAC prohibited transactions across various business lines to see if they are processed and flagged appropriately.
  • Quality assurance testing – Review a sample of transactions to ensure all required OFAC compliance steps were completed accurately.
  • Workflow testing – Walk test sample transactions through every step of your OFAC compliance program workflow to identify any gaps.

Technology Testing

It’s important to validate that your OFAC compliance technology tools are operating correctly through methods such as:

  • User access testing – Confirm appropriate access controls are in place and system permissions are assigned properly.
  • Change management testing – Verify system changes were authorized, tested, and implemented correctly.
  • Interface testing – Assess integration between your OFAC screening system and other platforms to ensure reliability.
  • Business continuity testing – Test disaster recovery provisions and resilience of OFAC compliance systems.

Compliance Program Testing

Lastly, directly test the operational effectiveness of key OFAC compliance program components:

  • Training tests – Evaluate employee knowledge through scenarios and surveys after OFAC training.
  • Recordkeeping tests – Inspect documentation is retained properly per OFAC requirements.
  • Escalation testing – Submit mock issues to confirm protocols are followed for escalating OFAC alerts.
  • Reporting testing – Verify accuracy of compliance reports and statistical data.

Leveraging Technology for Continuous Controls Monitoring

Testing individual transactions and program components manually provides useful data points but can be time-consuming. Many organizations are now turning to technology for automating OFAC compliance testing and enabling continuous controls monitoring.

OFAC compliance software can be a powerful tool for automating sanctions screening, transaction monitoring, auditing, and testing. Here are some key ways compliance technology can enhance OFAC program effectiveness:

  • Automated screening against OFAC lists for customers, vendors, transactions, etc. This provides greater accuracy and speed compared to manual reviews.
  • Risk-ranking of potential name matches for more efficient investigation.
  • Workflow tools to document review and escalation of possible OFAC hits.
  • Built-in auditing capabilities to track screening, alerts, and compliance processes.
  • Dashboards and reporting to identify activity patterns and risks.
  • Integrations with other systems like AML monitoring and KYC data.
  • Ability to auto-update OFAC lists without delay when new entries are added.
  • Advanced matching algorithms that reduce false positives.
  • Embedded testing tools for validating OFAC compliance controls.
  • Ongoing transaction lookback when new OFAC entries are added to historical data.
  • Case management functionality for investigations and documentation.

Leveraging this technology enables continuous, automated testing of OFAC compliance program effectiveness. For example, compliance software can:

  • Run scheduled, automated tests on sample transaction data sets.
  • Perform continuous false positive analysis as new transactions are screened.
  • Validate new OFAC list updates are loaded correctly.
  • Monitor system uptime and performance.
  • Assess data quality and completeness.
  • Identify potential gaps in screening coverage.
  • Generate audit reports on compliance monitoring results.

Technology-enabled testing provides dynamic insights compared to periodic manual testing. It also reduces the burden on compliance teams by automating many repetitive tasks. Intelligent OFAC compliance software can become a built-in auditor that is continuously monitoring controls and flagging potential issues before they become major problems.

However, it is still important to supplement automated testing with manual verification. Compliance staff should review system-generated reports, perform test transactions, audit data accuracy, and assess investigation workflows. Technology does not eliminate the need for human insight in overseeing OFAC compliance programs.

Used together, technology automation and manual testing create a robust framework for evaluating and strengthening OFAC compliance on an ongoing basis. A well-designed program should incorporate both methods to get a complete picture of performance and risk.

Lawyers You Can Trust

Todd Spodek

Founding Partner

view profile

RALPH P. FRANCHO, JR

Associate

view profile

JEREMY FEIGENBAUM

Associate Attorney

view profile

ELIZABETH GARVEY

Associate

view profile

CLAIRE BANKS

Associate

view profile

RAJESH BARUA

Of-Counsel

view profile

CHAD LEWIN

Of-Counsel

view profile

Criminal Defense Lawyers Trusted By the Media

schedule a consultation
Schedule Your Consultation Now