Jun 26 2007 Brett Wolf
The US Securities and Exchange Commission has released an online tool that allows financial institutions to better know their customers with minimal effort and no cost. The tool allows users to view lists of publicly traded companies, including financial institutions, that have "business interests" in countries the US secretary of state has designated as "state sponsors of terrorism."
The tool will be particularly helpful for US financial institutions working to assign scarce anti-money laundering resources and craft risk-based programmes to comply with Office of Foreign Assets Control's rules. It should be noted that the tool does not expose non-public information, it simply offers a searchable database containing information that companies self-reported in SEC filings.
"The law already requires companies to report on any material activities in a country the secretary of state has formally designated a state sponsor of terrorism. Our role is to make that information readily accessible to the investing public," said SEC chairman Christopher Cox. "Making it easier to find significant information such as this by tapping the power of technology is central to the SEC's mission."
Using the tool
The SEC tool is extremely user friendly. After arriving on the tool's web page, one will see a menu of each of the countries on the US State Sponsors of Terrorism list — currently, Cuba, Iran, North Korea, Sudan and Syria. Clicking on any of these countries will bring up a menu of the companies whose 2006 annual reports disclose business activities in that country. Clicking on the name of a company will, in turn, bring up the pertinent portions of that company’s annual report.
"The existence of a disclosure by a company concerning activities in one of the listed countries does not, in itself, mean that the company directly or indirectly supports terrorism or is otherwise engaged in any improper activity," the SEC noted when announcing the tool.
While the SEC reports that the tool was created with investors in mind, it will no doubt prove useful to financial institutions in their efforts to assess terrorist-financing and OFAC-related risks and make account-monitoring decisions.
