OFAC, the Office of Foreign Assets Control, is a division of the Department of the Treasury. OFAC is responsible for helping to insure that United States entities do not engage in transactions with "enemies" of the United States, as defined by various Executive Orders and Acts of Congress. OFAC has the ability to enforce penalties of up to $5 million and 30 years in jail for violations. Banks, along with other entities, are expected to comply with these regulations and many have been fined for accidental violations. Due to these regulations, large financial institutions have been actively implementing OFAC filtering solutions over the past several years. Now, most of these institutions actively check high-risk OFAC areas such as new accounts, wire transfers, and customer files. However, smaller institutions such as community banks have been somewhat slower to incorporate OFAC filtering solutions. This is due primarily to the following reasons: 1) a lack of knowledge of the regulations, 2) their perception of being at low risk, 3) the high cost of software solutions. This article examines these reasons in light of current events. Over the past three years, OFAC has been a frequent topic at banking conferences, in Internet banking forums, and in compliance literature, increasing awareness of the regulations. In addition, ignorance of OFAC is not an excuse that one would wish to use, since complete ignorance may be treated much more harshly than a mistake in a flawed system. At many conferences, knowledgeable speakers have stated that the worst response that a bank could make when confronted with an OFAC violation would be "What's OFAC?" Even partial attempts to implement OFAC filtering procedures could be seen as far preferable to ignoring the regulations altogether. In reviewing risk perception, many community banks, especially those not located in states with a large international base, feel their risk of an OFAC violation is so small that it is not worth investing in a filtering system. Though understandable at first glance, there are several flaws in this assumption. First, many violations are not intentional, but accidental, such as a college student who receives wired funds from his parents through an OFAC blocked bank located in London. Secondly, not all OFAC entities are located abroad. Some of the blocked entities are based in the U.S., such as I.P.T. Company, located in Warminster, PA. In addition, bank examiners from the OCC, OTS, and FDIC are increasing their inquiries regarding a bank's compliance efforts in the OFAC area. Finally, as the large and mid-size banks implement OFAC filtering, OFAC entities who seek to avoid having their transactions blocked may seek out institutions such as community banks that they feel will be less likely to have filtering policies in place. What about the cost issue? OFAC software has historically been expensive for community banks. As a start, banks should screen new accounts and wire transfers as they occur, and their customer files on a regular basis, preferably whenever OFAC changes its master lists. Software that accomplishes this has typically cost between $4000 and $10,000, putting it out of the reach of many smaller institutions. However, the major software vendors have recently lowered prices substantially. Community banks can now purchase quality OFAC filtering software for prices in the range of $600 to $2000. With these lower costs, all banks should be able to implement OFAC checking with very little investment required. With the fact that knowledge about OFAC has become commonplace, and because the potential cost of non-compliance is high, software solutions are becoming invaluable for community banks. And now that system prices have been greatly reduced, community banks can easily secure this area of their institution.