Senate Finance Committee Questions OFAC's Ability to Cut Off Terrorist Financing
On December 22, 2003, Senate Finance Committee Chairman Chuck Grassley and Ranking Member Max Baucus sent a letter expressing concerns about the ability of the Office of Foreign Assets Control to cut off terrorist financing.
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In their letter, Senators Grassley and Baucus raise a number of concerns and questions about OFAC and its operations regarding (partial list):
Efficient and effective designation of terrorists, and freezing of assets. The Senators express concern as to whether OFAC is designating groups and individuals as terrorists, and ordering the freezing of assets as quickly as it should. The letter cites news reports that highlight two post-September 11th instances in which non-U.S. agencies have identified persons as linked to terrorism and terrorism financing before OFAC did so.
Ability to detect sanctions violations. The Senators also raise concerns and questions with regard to OFAC's enforcement and knowledge of violations of sanctions and financial transaction restrictions, which they state is a problem highlighted in a report by the Treasury Department's (Treasury's) Office of Inspector General (OIG). This report states that one problem is OFAC's over-reliance on public awareness and voluntary compliance.
Management and recordkeeping problems. The letter cites the OIG's report as identifying other challenges in OFAC's internal management practices, specifically, its recordkeeping problems. The OIG report found accuracy problems within the database of blocked or rejected transactions, particularly with duplicate entries.
OFAC's license tracking. The Senators also express concern about OFAC's Licensing Division, noting that despite the importance of tracking licenses, which allow transactions that are normally prohibited under OFAC's sanctions program, the OIG's report found that OFAC has very little assurance that its information on the number, purpose, and status of such licenses is complete and accurate.
Senate Finance Committee Press Release (dated 01/02/04) available at http://finance.senate.gov/press/Gpress/2004/prg010504.pdf
Letter to OFAC from Senators Grassley and Baucus (dated 12/22/03) available at http://finance.senate.gov/press/Gpress/2004/newcomb.pdf