CUNA tells OFAC to ease up on disclosure rule

WASHINGTON-CUNA recently wrote a comment letter opposing a proposal by the Office of Foreign Asset Control (OFAC) to publicly disclose penalties imposed by the agency. The proposal was published in the June 19 Federal Register. "We have always been concerned that the ever-increasing complexity of the OFAC sanctions programs raises the risk that entities may mistakenly violate the requirements," CUNA Assistant General Counsel Jeff Bloch wrote. "Publicly disclosing such violations would aggravate this potential problem by ruining the reputation of those entities that would be affected." CUNA recommended that OFAC give violators 90 days, or longer, to come into compliance with its regulations before including them in the disclosure list, which will be published at least quarterly. Bloch wrote that the sanctions for violations are severe enough that disclosure is unwarranted, as it could lead to members losing confidence in the institution and liquidity problems. "CUNA recognizes that the goal of the proposed rule is to provide more information to the public in order to promote greater awareness of its enforcement activities and to encourage greater compliance with the OFAC sanctions program. Although we generally support efforts in favor of transparent government and disclosure of violations of law, we believe that disclosing information about OFAC penalties may unfairly impact some of the entities that are listed," Bloch wrote. "The burdens of complying with the OFAC sanctions program are already quite substantial, which includes significant monitoring of an ever-changing list of terrorist or money laundering suspects, as well as very steep penalties for noncompliance. Although most large financial institutions use specialized software to filter or track transactions for purposes of OFAC compliance, such software is prohibitively expensive for many small credit unions." CUNA also argued that disclosure could also exacerbate the weakened American economy.