Financial Operations Network | OFAC: Are You Compliant or Just Think You Are?
Threats to businesses abound and given that accounts payable issues payments, it is a prime target for criminal perpetrators of all kinds.
OFAC compliance, SDN List, vendor sanctions
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OFAC: Are You Compliant or Just Think You Are?

OFAC: Are You Compliant or Just Think You Are?

If your accounts payable department wants a motto, it might go with Semper Vigilo — “always vigilant.”

Threats to businesses abound and given that accounts payable issues payments, it is a prime target for criminal perpetrators of all kinds.

In addition to prevention of myriad fraud schemes, AP must also ensure information protection as well as avoid unwitting payments to sanctioned entities. This, of course, involves compliance with the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC). OFAC keeps track of and enforces U.S. sanctions on countries, entities, and persons — including drug traffickers, WMD dealers, dirty diamond traders, organized crime syndicates and, of course, terrorist organizations. Sanctions aim to enforce U.S. policy, prevent criminal activity and combat terrorism. (It’s a real thing — see one shared services director’s story in Avoiding the Men in Black.)

You’re familiar. And you’re compliant, right? Or do you just think you are? How are you managing your compliance? It’s not enough to run your list against OFAC’s SDN list once in a while, or even (you thought of this) to check your new vendors against the list. Of course, you are adding new vendors all the time. Those need to be checked and you’re doing that.

Here’s the challenge. OFAC updates the SDN list and the country sanction programs all the time too. If you’re only comparing your new vendors, going to the Treasury and saying “How does this guy look,” one or two a day, you’re missing the possibility that a new entry on the SDN list matches a name that is already on your list!

In other words, every time either you or OFAC updates your respective lists, you need to crosscheck. OFAC’s list changes are unpredictable, so the only safe method is to check every day.

Now here’s where it gets complicated. First, look at the numbers involved. Consider a check of your list, of, say 10,000, to OFAC’s SDN list of 18,000. Each one of your 10,000 names must be compared with each one of the 18,000 names on the SDN list. And the match has to look at each word or name in a phrase or multi-word name. That by itself is a time-intensive proposition for a computer.

Second, we’re not talking about exact matches here — that would be too easy. All those names — including international names — are not consistently spelled. Nor can you be sure they were entered correctly. So a name may be spelled in different ways (e.g. Smith or Smyth, Osama or Usama), and could include typos.

A matching program must also use algorithms that include Soundex, which in essence does a near-match on phonetic sound rather than precise spelling and applies Jaro Winkler scoring, a string metric that measures the “edit distance” between letter sequences, to help uncover transpositions or other errors that an exact match would miss. Depending on the list size, even computers can require hours of processing to do a complete comparison of two lists — not something you want to do every day.

What you need to do every day is check your new additions against the OFAC list, and new OFAC additions against your entire list. It’s much more efficient than running both complete lists against one another. But you have to do both.

If you’ve done a whole list check at a point in time, and you think you are in good shape going forward just by reviewing your new vendors — you’re half right. But in compliance, half right is all wrong. And being wrong can be expensive.

VendorInfo does OFAC/SDN list compliance checks right: both directions, every day, with all the complex matching algorithms required. Upon a simple IT-lite set-up, VendorInfo runs daily dual-direction checks and provides all flagged entities (matches and near-matches) back to its clients to review.

Says VendorInfo’s CIO Richard Burke, “We run the checks every day and you receive a checklist of any flagged names.” The suspect names may not even look alike but the Soundex flags them because they look similar and the computer scores them high. “Any matches that exceed a certain score are sent to our customer to review.”

You determine if the entity is okay. If yes: approve. If no: stop transaction and report.

“Once you check them off and say, ‘OK I’m approving these 50 names,’” Burke explains, “then tomorrow when the check is run, you will not see those 50 because they have been approved.

“The whole process saves a tremendous amount of time and is very quick,” Burke notes.

And you don’t have to worry about a new name popping up on the SDN list after you added it to your master file because VendorInfo’s OFAC check is looking at all of those. Every day. To keep you compliant.

Click here to request more information about vendor verification and compliance or call us at (678) 335-5735.



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For most organizations, deploying a technology solution is a significant investment, and like most investments, the decision point ultimately comes down to the expected return on that investment.

According to a recent benchmark study by The Accounts Payable Network, 60% of AP customer service calls are from vendors while 40% are from internal customers. Vendor issues actually make up even more of the AP call volume than the 60% identified. Many times when a vendor has an issue, the vendor contacts their buyer or purchasing representative, who in turn contacts AP. Even though the call comes from an internal customer, the question originated with the vendor.

Vendor calls affect productivity in your organization exponentially. When vendors call the requisitioner, they are affecting that person’s productivity. Your internal customer’s productivity shrinks when fielding the vendor’s call and again when making the follow up call to AP and getting back to the vendor. Finally, AP’s productivity suffers as a result of the internal customer’s call, the payment status research and the follow-up communication.

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InvoiceInfo can help you provide best-in-class customer service to your vendors around the world at a fraction of the cost.

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With InvoiceInfo, you won’t have to staff your customer service team with 24-hour coverage in multiple languages to provide high-quality customer service around the world.

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Enhance AP’s Role As a Strategic Partner

Learn how InvoiceInfo can help AP do more with less while continuously improving productivity and bottom-line results.

Many automation technologies such as scanning, workflow, e-invoicing, ACH, and electronic invoicing require significant investments of money, time and talent, making it difficult to get buy-in from upper management. Not InvoiceInfo!

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Enhance Vendor Relationships

InvoiceInfo helps suppliers’ AR departments with simple and convenient access to invoice payment status online at a cost savings for all involved.

It may seem that the organization paying the vendor should hold all the cards in the relationship. But sometimes the opposite is true. Past-due payments and customer service perceptions can harm supplier relationships and disrupt the supply chain.

Your vendors and vendor relationship managers are living in a dynamic, fast-paced environment, so when invoice information is required, it is needed quickly and expected to be of high quality. With InvoiceInfo, your suppliers get answers to invoice inquiries real time, 24/7 with no need to leave messages and wait for responses. Studies show that confidence in data increases when suppliers access invoice and payment information themselves.

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Give Procurement and Buyers the Tool They
Need to Respond to Vendors Quickly

Not only can InvoiceInfo be used by suppliers to learn the status of invoice payments, it can also be used internally within your organization.

In addition to reducing calls from vendors regarding invoice status, you can also reduce internal emails and calls from co-workers wanting to learn the status of invoice payment, and save time and effort and boost efficiency and productivity across the organization. Studies show that 40% of AP customer service calls are from internal customers. Many of these are from requisitioners who have received calls or emails from the supplier checking on payment status. These calls are often more expensive for the company because the internal staff member has taken the call or received an email from the supplier, contacted AP for the payment status and had to return the call or email the supplier.

By providing the vendor with a convenient and credible online option to get the answers it needs regarding payment status, you can eliminate multiple calls/emails between the vendor and the requisitioner saving time and money.

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Eliminate Difficult Vendor Calls and See
Productivity and Staff Morale Soar

Reduce invoice payment inquiries and “promote” your vendor service team to more satisfying and profit-producing tasks.

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According to a recent American Express survey on customer service, more than one-third of consumers have lost their temper with a customer service professional in the past year. Of those who lost their temper, three in ten “hung up the phone.” Your staff will no longer have to deal with difficult collectors who can be upsetting and disruptive. Your staff will feel that their time and talents are being put to better use and will feel better about themselves, their jobs and their organization. Reducing these calls can be a real productivity and morale booster for your AP department!

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Simplify and Streamline Vendor Onboarding

According to Price Waterhouse Coopers, the average organization spends about $20 in labor to file each paper document, approximately $120 in labor searching for each misfiled document and $220 in re-creation of a document.

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Verify the Accuracy of Vendor Information and Stay in Compliance with IRS and Treasury Department Regulations

Government regulators are increasing the complexity of regulations and penalties associated with vendor-related non-compliance.

Penalties for incorrect 1099’s have more than doubled in recent years. Over the last several years, OFAC has levied more than $1 billion in fines against American companies or subsidiaries that did business with restricted businesses, organizations and individuals on its SDN list. In addition to fining these companies, the Treasury Department posts the names of infringing organizations along with fines paid.

VendorInfo Onboarding Module verifies the accuracy of vendor information and helps protect your organization by avoiding embarrassing penalties and fines.

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