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ICBA Supports Risk-Based OFAC Enforcement Rules

Interim Rule Provides Greater Flexibility Based on Bank's Size, Location and Products

Washington, D.C. (March 2, 2006)—The Independent Community Bankers of America (ICBA) told regulators it supports interim rules that take a risk-based approach to enforcement actions when banks are required to freeze or block assets on the Office of Financial Assets Control (OFAC) specially designated nationals (SDN) lists. The interim rule provides greater flexibility by considering a bank's size, location and product offerings and is in keeping with the approach to bank supervision taken by other federal regulators.

"ICBA strongly supports the interim rule's movement to a risk-based assessment for compliance and enforcement of OFAC regulations by banks," writes Robert G. Rowe, III, ICBA regulatory counsel in a March 2 letter. "ICBA also endorses efforts by OFAC to coordinate with the banking agencies and to enhance communications between OFAC, the banking regulators and community banks. The risk matrix outlined in the interim rule, if kept up-to-date, will provide a useful tool for community banks as they assess and address risks with their OFAC compliance efforts."

ICBA urged OFAC not to make mandatory its recommendations that banks assign OFAC compliance duties, regularly audit for OFAC compliance and include OFAC training. For instance, OFAC recommends that banks appoint an OFAC compliance officer. However, while many community banks do not currently designate an OFAC compliance officer, OFAC compliance duties are assigned to the same individual responsible for Bank Secrecy Act and Anti-Money Laundering requirements.

ICBA looks forward to continuing to work with OFAC to streamline and simplify OFAC compliance and enforcement requirements to ensure that limited resources are focused where they provide the greatest return.

For a copy of the letter, please go to www.icba.org.