This is the eighth and final part in our advanced due diligence series, and it focuses on Patriot Act and U.S. economic sanctions program searches. We hope you’ve also read the prior posts in this series and used them to begin developing a more comprehensive due diligence strategy to protect your investments. To learn how CT Lien Solutions can help, e-mail firstname.lastname@example.org.
Patriot Act searches are a vital part of due diligence searching with any financial transaction. Section 326 of the Patriot Act requires banks to have a written Customer Identification Program (CIP). The CIP must be incorporated into the bank’s Bank Secrecy Act/Anti-Money Laundering compliance program, which is subject to approval by the bank’s board of directors. The CIP must include procedures for determining whether a potential or current customer appears on any federal government list of known or suspected terrorists, terrorist organizations or is otherwise subject to a U.S. economic sanctions program. The federal government’s list of people and companies subject to a sanctions program is called the Specially Designated Nationals and Blocked Person List (SDN). The U.S. Treasury’s office of Foreign Asset Control (OFAC) maintains the SDN List.
While Patriot Act and economic sanctions program searches have only an indirect bearing on determining a debtor’s creditworthiness or securing collateral for financing, failure to include them in a solid due diligence plan could result in onerous penalties. Although OFAC has yet to impose a fine upon a lender for extending credit to a person on the SDN list, the statute underlying the SDN list provides specific authority to impose just such a fine.
In conclusion to our series, thorough due diligence is more essential than ever, and is not an area to scale back or cut corners on. By taking a few additional measures, financial institutions, leasing companies, commercial finance organizations and their legal counsel can better protect themselves against foreclosures and large write downs. Lenders can improve the strength of their portfolios, and potentially increase their competitive advantage.
Again, to learn how CT Lien Solutions can help, e-mail email@example.com.