New OFAC Pilot Program Licenses Private Firms to Track Small Financial Flows for Investigations

The OFAC Licensure for Investigators Act sets up a temporary, five-year pilot program that gives specific private companies a new, powerful tool: the ability to conduct “nominal financial transactions” solely for investigative purposes. Essentially, this bill allows the Office of Foreign Assets Control (OFAC) to license private firms so they can legally move small amounts of money to trace financial crimes—something currently restricted by sanctions and financial regulations.

The Fine Print: What’s in the License?

This isn't a free pass; it’s a highly regulated experiment. Under SEC. 2, OFAC must set up this program within one year. The key phrase here is “nominal financial transactions”—very small amounts of money used to follow a paper trail or identify bad actors. Think of it like being allowed to drop a few breadcrumbs in a complex financial system to see where the mice run. OFAC must coordinate closely with the Financial Crimes Enforcement Network (FinCEN), which is key because FinCEN tracks the big picture of money laundering and financial crime.

For the private firms that get one of these licenses, the reporting requirements are serious. They must send a detailed report to the OFAC Director every single month covering everything they did under the license. This is a significant administrative lift, but it’s intended to keep a tight leash on this new authority being handed to the private sector. If you work in compliance or due diligence, this means your firm might get new, powerful investigative capabilities, but it comes with a massive increase in regulatory oversight and monthly paperwork.

Who’s Watching the Watchers?

While this program could be a great tool for uncovering complex financial crimes—like tracking down the source of small cryptocurrency transfers or finding shell companies—the bill raises questions about accountability. The most detailed information about the program isn't going to be public. OFAC must report to Congress annually, but the initial report is general (how many licenses granted, overall usefulness). The real substance—who applied, who got licensed, and what problems OFAC ran into—is reserved for a classified briefing to key Congressional committees. This means the public won't get the full picture of how this new power is being used, or if it’s being abused, until after the five-year pilot is over.

Another concern is the vagueness around that term “nominal financial transactions.” The bill doesn't define it, leaving OFAC to set the exact monetary threshold. Depending on where OFAC draws that line, the investigative scope could be much wider than intended. For individuals or small businesses, this matters because it means private firms, operating under a government license, could be legally tracing your small financial activity without a clear, public definition of what counts as 'small' or 'nominal' enough to warrant their attention. It’s a shift of investigative responsibility to private entities, and we need to trust that OFAC’s definition keeps that power tightly contained.