Yet another despot is dead. The killing of Libyan dictator Muammar Gaddafi last week, and the grisly videos and pictures of his final moments, have dominated international news ever since. But there is still a question lingering for financial institutions and organizations – How does Gaddafi’s death affect U.S. companies and financial institutions regarding compliance with the U.S. Treasury’s Office of Foreign Assets Control (OFAC) and other government watch lists?
As of yet, OFAC hasn’t announced any watch list changes resulting from Gaddafi’s death. We probably won’t see a change to the OFAC or other government watch lists containing Gaddafi for quite some time, as there are still billions of dollars in frozen assets tied to his name. We saw the same thing happen when Saddam Hussein and Osama Bin Laden were killed. To this day, Saddam, Bin Laden and the groups of organizations that were suspected of channeling funds to Bin Laden's activists remain on the OFAC list.
The concerns of Anti-Money Laundering experts regarding heightened money transfers among al-Qaeda operatives that existed after Bin Laden’s death remain after the demise of Gaddafi. Gaddafi’s death marks a need for financial institutions to be cognizant of the “suspicious” accounts and monitor the transactions and activity within those accounts.
Although most of the financial sanctions against Libya have been lifted and General Licenses issued, there are still constraints. The OFAC-imposed sanctions on Gaddafi and Libya remain in effect and institutions must be aware of those sanctions and conduct the proper due diligence against their customer base.
A company or financial institution that does business with anyone on OFAC’s list – or any other federal watch list for that matter – will face crippling fines and a public relations hit that could put the offending company out of business.