WASHINGTON – Private businesses such as rental and mortgage companies and car dealers are checking the names of customers against a list of suspected terrorists and drug traffickers made publicly available by the Treasury Department, sometimes denying services to ordinary people whose names are similar to those on the list.
The Office of Foreign Asset Control’s list of “specially designated nationals” has long been used by banks and other financial institutions to block financial transactions of drug dealers and other criminals. But an executive order issued by President Bush after the Sept. 11, 2001, attacks has expanded the list and its consequences in unforeseen ways. Businesses have used it to screen applicants for home and car loans, apartments and even exercise equipment, according to interviews and a report by the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area to be issued today.
“The way in which the list is being used goes far beyond contexts in which it has a link to national security,” said Shirin Sinnar, the report’s author. “The government is effectively conscripting private businesses into the war on terrorism but doing so without making sure that businesses don’t trample on individual rights.”
The lawyers’ committee has documented at least a dozen cases in which U.S. customers have had transactions denied or delayed because their names were a partial match with a name on the list, which runs more than 250 pages and includes 3,300 groups and individuals. No more than a few people on the list, available online, are U.S. citizens.
Yet anyone who does business with a person or group on the list risks penalties of up to $10 million and 10 to 30 years in prison. The law’s scope is so broad and guidance so limited that some businesses would rather deny a transaction than risk criminal penalties, the report finds.
“The law is ridiculous,” said Tom Hudson, a lawyer in Hanover, Md., who advises car dealers to use the list to avoid penalties. “It prohibits anyone from doing business with anyone who’s on the list. It does not have a minimum dollar amount. … The local deli, if it sells a sandwich to someone whose name appears on the list, has violated the law.”
Molly Millerwise, a Treasury Department spokeswomen, acknowledged that there are challenges in complying with the rules but said that the department has extensive guidance on compliance. She also said most businesses can root out “false positives” on their own. If not, OFAC suggests contacting the firm that provided the screening software or calling an OFAC hotline.
“So the company is not only sure that they are complying with the law,” she said, “but they’re also being good corporate citizens to make sure they’re doing their part to protect the U.S. financial system from abuse by terrorists or (weapons) proliferators or drug traffickers.”
Tom Kubbany is neither a terrorist nor a drug trafficker, has average credit and has owned homes in the past, so the Northern California mental health worker was baffled when his mortgage broker said lenders were not interested in him. Reviewing his loan file, he discovered something shocking. At the top of his credit report was an OFAC alert provided by credit bureau TransUnion that showed that his middle name, Hassan, is an alias for Ali Saddam Hussein, purportedly a “son of Saddam Hussein.”
The OFAC list stated Ali Saddam Hussein was born in 1980 or 1983. Kubbany was born in Detroit in 1949.
Under OFAC guidance, the date discrepancy signals a false match. Still, Kubbany said, the broker decided not to proceed. “She just talked with a bunch of lenders over the phone and they said, ‘No,’ ” he said. “So we said, ‘The heck with it. We’ll just go somewhere else.’ “
David Cole, a Georgetown University law professor, has studied the list and at one point found only one U.S. citizen on it. “It sounds like overly cautious companies have started checking the list in situations where there’s no obligation they do so and virtually no chance that anyone they deal with would actually be on the list,” he said.
Still, Neil Leverenz, chief executive of Automotive Compliance Center in Phoenix, a firm that helps auto dealers comply with federal law, said he spoke to the general manager of a Tucson dealership who told him that if he had known to check the OFAC list in late summer of 2001, he would not have sold the car used by Mohamed Atta, who went on to fly a plane into the World Trade Center.