U.S. Consumers Getting Snagged in Efforts Against Terrorist Financing Networks

Credit bureaus, health insurers, potential employers, car dealerships and landlords have been checking applicants' names against those on the list of "Specially Designated Nationals" (SDN) issued by the Treasury Department's Office of Foreign Assets Control (OFAC), according to a report issued this month by the Lawyers Committee for Civil Rights of the San Francisco Bay area, The OFAC List: How a Treasury Department Watchlist Ensnares Everyday Consumers (available for free download from the LCCR website).

As the report's author, Shirin Sinnar, points out, the OFAC list is distinct from the well-known "No Fly" lists maintained by the Transportation Security Administration (the names on that list are not available to the public). The TSA lists were established after 9/11 specifically to signpost potential terrorist suspects.

The OFAC list is a different animal: it is a list of individuals and organizations with whom US persons (which includes corporations) are prohibited from doing business. This prohibition is one tool in a larger toolkit that uses economic policy to promote foreign policy.

The entire OFAC list contains not only designated global terrorists, but also drug traffickers, suspected manufacturers of weapons of mass destruction, and firms in countries against which the U.S. has economic sanctions (such as Iran or Cuba). A post- 9/11 executive order aimed at freezing assets and transactions by terrorists has helped expand the suspected terrorists on the list by several-fold.

There are very few Americans on the list of about 6,000 names, but because even partial names may be flagged, Americans with even a partial match with list names (including common names such as "Abdul" or "Lopez" or "Muhammad" or "Hussein") could be flagged.

The problem with the list, according to Sinnar, is that the executive order behind it is far to broad in scope. OFAC lists do not limit either the kinds of institutions subject to penalties if they sell to a list member. Nor do they have sufficient controls to ensure that innocents are kept off the list. The absurd result could be that every time you go down the street to your local 7/11 to buy a newspaper and a quart of milk, you could be checked by a store owner who, justifiably, doesn't want to heavily penalized for transacting with a terrorist.