OFAC Screening and Terrorist Watchlist Compliance
Broker-dealers must check all prospective customers against the Specially Designated Nationals (SDN) list maintained by:
OFAC (Office of Foreign Assets Control), a division of the U.S.
Complete Analysis & Legal Rationale
OFAC (Office of Foreign Assets Control), a division of the U.S. Department of the Treasury, maintains the SDN list of terrorists, narcotics traffickers, and sanctioned regimes. If a name matches the SDN list, the firm must BLOCK or FREEZE the transaction and immediately report it to OFAC within 10 days.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
OFAC administers the SDN sanctioned parties list.
SEC oversees securities laws, not national security sanction lists.
FINRA enforces SRO market rules.
FTC oversees trade and consumer protection.