Mar
28
Before You Name Your Kid, Check the SDN List
Posted by Clif Burns at 7:10 pm on March 28, 2007
Category: OFAC
If your name is Daniel Garcia, don’t even think of applying for apartment, a job, a mortgage or a car loan. Because you’ll be denied. Thanks, apparently, to increased use of OFAC’s SDN list to scan routine domestic transactions from used car sales to lease applications.
This is the conclusion of a report issued today by the Lawyers Committee for Civil Rights of the San Francisco Bay Area. The report trots out a half-dozen horror stories of OFAC screening gone wrong and finds:
- A couple whose mortgage application was denied simply because the husband’s middle name “Hassan” was listed on the SDN list as an alias for one of Saddam Hussein’s sons;
- A couple whose first home purchase couldn’t close because the first and last name of the husband, both common Hispanic names, matched a name on the SDN list;
- An individual who couldn’t purchase a car simply because his last name, Muhammad, caused a credit agency to report that he was a hit on the SDN list
- An individual that could not pick up $50 that had been sent to him by a money transfer service because his first and middle names were Mohammed Ali;
- A PayPal customer named Yusuf Mohammed who had his account closed; and
- A man who couldn’t buy a treadmill because his first name is Hussein.
The problem occurred in these instances for one of three reasons: (1) the company didn’t know how to properly identify a hit; (2) the company didn’t want to take time to determine if a proper hit was a false positive; or (3) even if the company was willing to take that time, the SDN entry lacked sufficient identifying information (e.g. no date or place of birth) to determine whether the hit was a false positive.
Our not-so-hypothetical SDN Daniel Garcia (not one of the Lawyer’s Committee’s examples) has a common Hispanic name and his SDN entry has no place of birth or date of birth that would allow a simple ID check to verify that the hit was a false positive. See for yourself:
Needless to say as more and more companies with less and less screening experience screen customers against the SDN list, anyone named Daniel Garcia might consider changing his name.
The Lawyer’s Committee report raises two interesting issues. First, although the real SDN has the legal right to challenge his designation, the mistaken SDN has neither the right to challenge the designation nor to obtain an official determination that he or she isn’t the real SDN. OFAC’s refusal to provide such an avenue of relief is, indeed, hard to rationalize. OFAC is giving more rights to the alleged terrorist than to an ordinary American. (Would somebody get Lou Dobbs on this?)
Second, because of the abundance of common Hispanic and Middle Eastern names on the SDN list, careless use of the list may hide unlawful discrimination in the provision of housing, credit or employment. A company that simply refuses to provide service to a hit without taking steps to verify whether the hit really is an SDN will have a hard time justifying that the SDN list was the real reason for the denial rather than an intent to discriminate based upon national origin.
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Copyright © 2007 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
7 Comments:
I worked at OFAC for several years, and for a while I was a compliance officer manning the hotline, which mostly consisted of working through suspected false hits with banks from big to small, from New York money center institutions to community banks. To be fair, with the often sketchy details given for SDNs, there were a lot of hits that were tough and I had a lot of patience for the folks who had to deal with the process (and the bureaucracy). But some were just absurd — my best was a hit on East Palestine, Ohio. Um, it’s not the PLO, buddy. Still, with a private sector mentality even then I tried to be patient and clinical, and educate callers on best practices for screening. Yes, OFAC needs to do a much better job with the SDN list. I’ve heard and seen many horror stories. But it takes two to tango. Instead of cursing the obvious darkness, some people need to light a candle and use a bit of common sense. On a positive note, now that I’m in-house handling trade compliance, I am unusually sensitive to all sides of the story. Just my two cents….
Really? If it’s really me on the list, I can challenge, but if its a false positive, I have no recourse? Wow.
FormerOFAC: I agree with you completely. The problem is not just the vagueness of the list, but the refusal of some people to take even minimal steps to verify a hit or use common sense. The risk, of course, in failing to do that is that the company that simply refuses to do business with a hit without some checking risks a claim of discrimination as well.
Whoever suggested the lack of recourse for someone whose name is a false positive is off base. First, if funds get blocked on that basis, recourse is under 31 CFR §501.806 (“Procedures for unblocking funds believed to have been blocked due to mistaken identity.”) Second, if other action has been taken because of mistaken identity, the Compliance Hotline (800-540-6322) can be used to clear up the false match. Those on the hotline are, as FormerOFAC notes, patient and eager to assist.
Challenging the designation is usually not the appropriate recourse, since in most cases the bad guy whose designation caused the false name match is still a bad guy whose assets should still be blocked. (As noted, if the designation itself is wrong, the actual designee can provide information to challenge the designation under 31 CFR §501.807.) Finally, if it’s laziness or ignorance in dealing with the SDN List that created a company’s wrongful denial action, the possibility of a discrimination claim against the company is also out there. The amount of information available on a terrorist, narcotics trafficker, or representative of a target government or group is not always adequate.
OFAC has done a reasonable job of fighting such designations. For example, it did not simply adopt the UN’s lengthy list of Taliban names, many of them single, common Muslim first names, virtually all of which have hopelessly inadequate identifying information. Recognizing that this would simply have resulted in “false hit paralysis” and widespread discrimination, the U.S. Government simply named the Taliban as a group and Mullah Omar as the sole identified individual.
What OFAC won’t do (at least in my experience) is provide a “comfort letter” to clear someone whose identity has been confused with an actual SDN. On the one hand, this can be an issue if someone has a name similar to an SDN and wants to avoid future run-ins with banks, etc. But the rationale makes sense; i.e., OFAC is not in a position to prove negatives and it is bad practice to “bless” people, not to mention that OFAC simply doesn’t have the resources to divert to whitelists. So as AnotherFormerOFAC noted (trying to guess who you are…), someone who has been negatively affected by a false hit can petition to have funds released on a case by case basis. Handling blocked funds cases was my first gig at OFAC, and I actually designed the form used on the website because the prior practice was to accept requests in any form, which slowed the process down considerably. In any case, the SDN process is far from perfect–no arguments there–but IMO (and I am admittedly biased) OFAC administers it in a reasonable and thoughtful manner, all things considered. Finally, I enjoy the blog and its irreverent style, a la the BSA Aerospace Export Control Update. Keep tipping those sacred cows….
does this also apply to air travel? my name IS Daniel Garcia and i ALWAYS get “chosen” as the passenger that has to get felt up before i board a plane.
My name is Daniel Garcia. Most of the time the OFAC list is a minor inconvenience but sometimes it is very irritating. Paypal put a hold on my account twice. In both cases it was without warning and I had to send them scans of bill statements and photo ID. In both cases it put my business on hold until the matter was sorted out. I have no idea why they needed to do this more than once and I’m beginning to think it will probably happen every year.
In any evet I created a facebook group “Daniel Garcias who don’t like the OFAC SDN list”
http://www.facebook.com/home.php#/group.php?gid=101114445317&ref=nf
