Credit card issuer meets OFAC
compliance requirements

The Client

The Challenge

In wake of the 9/11 attacks in the US, the Office of Foreign Asset Control under the US Department of Treasury mandated a set of rules imposing federal economic sanctions on other countries, business entities or individuals based on certain guidelines. The regulations specified rules for organizations for handling accounts that needed to be blocked, transactions that were supposed to be refused, and records that were necessary to be maintained

As the penalties for non-compliance were severe, the client wanted to set up a mechanism for complying with OFAC regulations. However, with lack of experience and expertise from a technology and procedure perspective, the client was struggling to meet OFAC compliance requirements. For instance, while OFAC provided the client a SDN (Specially Designated Nationals) list, the client had to re-format the SDN-BE list to formats that were acceptable to the various sub-systems in the credit card processing lifecycle of the client. It then had to build the required controls in the system which flagged OFAC matches in various sub-systems, and generated reports for the same. These reports would then be used by the top management to review and take necessary actions. Flagging off records according to OFAC regulations was a fine balancing act, as a false positive OFAC record would have exposed the client to potential lawsuits. At the same time, non compliance would have attracted penalties upto $1 million, in addition to public embarrassment. Further, all the records were to be maintained for five years in an easily retrievable format. Having spent considerable time in interpreting OFAC rules, the client was facing a huge challenge in ensuring that its processes were OFAC compliant.

The Solution

With excellent domain expertise in the credit card industry, backed by good knowledge of OFAC compliance requirements, Patni was a preferred choice. Patni conducted Joint Application Development sessions with the business team to understand business rules and legal implications in each of the sub-systems.

Patni developed OFAC parsing logic for online applications to ensure a fast response time. Patni understood customization needs of each sub-application, and designed a common OFAC parsing logic that could be shared by all batch programs thereby
decreasing the development efforts.

Patni also created an exhaustive test bed for testing out all possible scenarios. To ensure that the product could be delivered in a short period of three months, Patni simultaneously conducted requirements gathering
Additionally, Patni was also responsible for the following activities:

	Generating adverse action letters for accounts being rejected as per OFAC regulations
	MIS reporting functionality
	Meeting OFAC archiving requirements.

The Technology

	Software: MQ series,COBOL II, CICS/ESA 4.1,ADS/O
	Hardware: IBM S/390, Sun SPAARC servers
	Database: Oracle 9.2.0.4.0, IDMS.

The Benefits

	Improved accuracy in identification of accounts: The solution proposed by Patni enabled the client in improving the accuracy of identification of accounts that required flagging by OFAC. For instance, on the first day of implementation, the client was able to identify twelve cases of OFAC flagged accounts which were later confirmed by OFAC to be correct
	Elimination of false positives: After one year in the production phase, not a single case of false positives has been identified
	Streamlined workflow: Patni’s proactive project management ensured that all the stakeholders took the appropriate decisions as and when needed, thereby ensuring a smooth workflow.