Comments on: Christopher Padilla Testifies on Export Controls Before House Subcommittee

By: Nick Pitaro

Nick Pitaro — Wed, 07 Nov 2007 15:04:16 +0000

Has anybody tried an EAR subscription at NTIS which includes searchable access to the various lists? I haven’t yet and would be interetsed in any comments re how it works in practice. The listed subscription price is $314/year.

By: ExportLawBlog » Padilla Disses DDTC During House Subcommittee Hearing

ExportLawBlog » Padilla Disses DDTC During House Subcommittee Hearing — Fri, 03 Aug 2007 19:44:51 +0000

[...] An article (subscription only) in today’s edition of Inside U.S. Trade reports on the hearing held last Friday by the House Foreign Affairs Subcommittee on export controls. We have previously described the prepared testimony of Christopher Padilla, who heads the Bureau of Industry and Security (”BIS”), which he gave during that hearing. During the Subcommittee’s questioning of Padilla, the subject of processing times for license applications at the Department of State’s Directorate of Defense Trade Controls (”DDTC”) came up: Padilla also criticized the staffing level of DDTC, which processes several times the licenses processed by … [BIS] with roughly half the staff. “In my personal opinion, I don’t think the State Department has sufficient resources to do the job,” Padilla said at the hearing. [...]

By: Clif Burns

Clif Burns — Thu, 02 Aug 2007 15:39:45 +0000

I think the balance of the issues raised by FormerOFAC isn’t that hard. I agree that OFAC should strive to put as many identifiers on the list as possible. But when they put up a name without any additional identiers, such as POB or DOB, then I think they should whitelist people who share that name. The agency can easily refuse to whitelist folks where there are identifiers and the problem is occurring because the person denying the transaction is an idiot. Wouldn’t this be an acceptable balance of the agency’s interest and the individual’s interest?

By: FormerOFAC

FormerOFAC — Thu, 02 Aug 2007 15:00:45 +0000

As an OFAC alumnus (now in-house) who cheerfully notes the foibles of my former agency, I nonetheless agree with the sentiment that OFAC should not be in the business of providing comfort letters or other official written notifications than any particular John Doe is not the same guy on the SDN list. I recognize that the problem of false positives can be vexing, and I believe that OFAC, screening vendors, and regulated parties share some degree of accountability to improve things. But for OFAC’s part I believe the answer–which I believe is an OFAC prerogative–is to continue to strive to provide more robust identifiers for SDN entries to allow for better reconciliation. That said, I manned the OFAC hotline for a couple of years, and the inquiries ranged from the sublime to the ridiculous. I entertained them all with clinical detachment and the ardent belief that taxpayer dollars merited my best efforts. But when Joe Blow calls from BFE Community Bank with a hit on East Palestine, Ohio (not it’s not the PLO, sir), there needs to be a little perspective. Yes, that’s a true story, albeit with changed names to protect the incompetent. I can also tell you that the SDN list results in countless thwarted transactions and blockings involving intended targets. It’s easy and admittedly fun to beat up the bureaucrats. And let’s face it, OFAC often makes the job easy. But to expect them to “pre-clear” someone who could be providing false paperwork or whose circumstances could change tomorrow doesn’t seem to be the right approach. Just one former bureaucrat’s perspective.

By: Scott K.

Scott K. — Wed, 01 Aug 2007 17:28:34 +0000

Mike,

The examples in the white paper took the following form:

Mr. & Mrs. Diego Hussein (I’m making it up)attempt to finance a new refrigerator at Sear’s. The finance company is alerted to a potential OFAC match, the finance company representative does not know how to resolve the potential match, and denies the financing application. This, according to the white paper (and the lawsuit) is OFAC’s fault.

I disagree. It maybe the fault of the screening vendor, it’s almost certainly the fault of the finance company for having such cr@ppy training/procedures. It’s not OFAC’s fault. As a compliance officer for a bank, I see these false positives resolved many, many times each day.

They are suing the wrong people.

By: Mike Deal

Mike Deal — Wed, 01 Aug 2007 15:53:24 +0000

Scott: With respect,your analogy doesn’t hold. Not only does OFAC know that the financial industry relies on its lists, it demands that they do, and punishes them if they don’t. If those lists are flawed or ambiguous, and there is no procedure for or practice of correcting them, then OFAC ought to be held to account, if not liable. If they don’t have the money or staff, the leadership ought to have the testicular resources to go to Congress and ask for them and confess what will happen if they don’t get them. Both Chairman Lantos and Speaker Pelosi are from the Bay area, and have constituents and friends in the organization that leading this fight. Its just not smart for OFAC to fight this one.

By: Clif Burns

Clif Burns — Wed, 01 Aug 2007 14:50:15 +0000

Well, a company would still have to check the list to make sure that hadn’t happened. And the OFAC document would make that clear. And how likely is it that somebody will be a false positive, get a letter from OFAC, and then be added to the list?

Of course, the other solution would be for OFAC to put enough info on the SDN that companies can easily resolve false positives by asking to see ID with DOB and POB on it, such as a passport. If someone had a doppelgänger on the list, they would just have to make sure that they had a current passport, which isn’t a big deal.

By: Scott K.

Scott K. — Wed, 01 Aug 2007 14:25:26 +0000

Because there’s no guarantee that they wouldn’t have added John Smith (DOB 12.6.73 Passport #, etc.) as an SDN in his own right in the latest update.

The document would only be able to verify that John Smith should not be confused with SDN #29789. If John Smith were added as SDN #31415, then the document is worthless, if not harmful.

By: Clif Burns

Clif Burns — Wed, 01 Aug 2007 14:08:06 +0000

I’m not sure I agree. If you had an OFAC document, that could be verified online, that said that John Smith with passport number 234566882 and DOB 12.6.73 is not the John Smith on the SDN list, why would it become worthless at the next update?

By: Scott K.

Scott K. — Wed, 01 Aug 2007 14:04:56 +0000

In OFAC’s defense (I can’t believe I’m saying that), such a certification would be worthless the moment the list was next updated. There is no guarantee that the person who is a ‘false positive match’ today won’t be a legitimate addition to the list tomorrow.