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← Series 7: Opens & Maintains Customer Accounts
Series 7 practice questionhardAccount Documentation — OFAC

When opening a new account, a broker-dealer must check the customer's name against the OFAC (Office of Foreign Assets Control) list. What is the purpose of this check?

  1. ATo verify the customer's credit score
  2. BTo determine whether the customer qualifies for margin trading
  3. CTo confirm the customer has passed the Series 7 exam
  4. DTo ensure the customer is not a specially designated national (SDN) or blocked person with whom financial transactions are prohibited✓ Correct answer
Explanation

Why D — To ensure the customer is not a specially designated national (SDN) or blocked person with whom financial transactions are prohibited

OFAC, a division of the U.S. Department of the Treasury, maintains a list of Specially Designated Nationals (SDNs) and Blocked Persons. Broker-dealers are required to screen customers against this list to ensure they are not conducting business with individuals or entities subject to economic sanctions. Transacting with persons on the OFAC list is a violation of federal law and can result in severe penalties.

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