is interdiction software required by ofac

For example, the Sudanese Sanctions Regulations prohibit transactions in support of commercial activities in Sudan. Are by or on behalf of a blocked individual or entity; Are to or go through a blocked entity; or. The bank should provide adequate training for all appropriate employees on its OFAC compliance program, procedures and processes. The size and needs of each institution help to determine what to look for in a package. Coordinate the development, implementation, and ongoing monitoring of a division's day-to-day compliance with BSA/AML/OFAC requirements. In general, the regulations that OFAC administers require banks to do the following: U.S. law requires that assets and accounts of an OFAC-specified country, entity, or individual be blocked when such property is located in the United States, is held by U.S. individuals or entities, or comes into the possession or control of U.S. individuals or entities. 162Refer to Guidance to National Automated Clearing House Association (NACHA) on cross-border ACH transactions. 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Due diligence for an inbound or outbound IAT may include screening the parties to a transaction, as well as reviewing the details of the payment field information for an indication of a sanctions violation, investigating the resulting hits, if any, and ultimately blocking or rejecting the transaction, as appropriate. 15231 CFR Chapter V. Unlike the BSA, the laws and OFAC-issued regulations apply not only to U.S. banks, their domestic branches, agencies, and international banking facilities, but also to their foreign branches, and often overseas offices and subsidiaries. 153A blocked account is a segregated interest-bearing account (at a commercially reasonable rate), which holds the customer's property until the target is delisted, the sanctions program is rescinded, or the customer obtains an OFAC license authorizing the release of the property. Currently, OFAC provides guidance on transactions parties on checks. Interdiction software allows companies to automatically screen for high-risk entities. Maintaining copies of OFAC licenses will also be useful if another bank in the payment chain requests verification of a license's validity. Implementing regulations can be found in Chapter V, Title 31 of the U.S. Code of Federal Regulations. Once the bank has identified its areas with higher OFAC risk, it should develop appropriate policies, procedures, and processes to address the associated risks. False B. The following examples may help illustrate which transactions should be blocked and which should be rejected. Citigroup Inc. ( C) has reached a settlement to resolve the issue of violating multiple sanctions programs of the Office of Foreign Assets Control (:OFAC). 150All U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. The Office of Foreign Assets Control (OFAC), a division of U.S. Department of the Treasury, administers and enforces foreign assets control in support of U.S. Sanctions programs, including organizations, individuals and risk countries that sponsor terrorism, narcotics trafficking, money laundering, and the proliferation of weapons of mass destruction. edison high school football; transparency lightbox; bath and body works happy vibes dupe; fantasyland hotel waterpark passes When a bank acquires or merges with another bank, both banks should take into consideration the need to review and maintain such records and information. For blocked property (including blocked transactions), records must be maintained for the period the property is blocked and for five years after the date the property is unblocked. OFAC can issue a license to engage in an otherwise prohibited transaction when it determines that the transaction does not undermine the U.S. policy objectives of the particular sanctions program, or is otherwise justified by U.S. national security or foreign policy objectives. 163Refer to the FFIEC Information Technology Examination Handbook's Retail Payment Systems booklet. iCIF automatically screens files of account or policy holders. Prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals. Before processing transactions that may be covered under a general license, banks should verify that such transactions meet the relevant criteria of the general license. With respect to domestic ACH transactions, the Originating Depository Financial Institution (ODFI) is responsible for verifying that the Originator is not a blocked party and making a good faith effort to ascertain that the Originator is not transmitting blocked funds. One suggestion is to use the best available interdiction software to execute screening for wire transfers and new accounts. If your bank feels it needs to invest in software in its attempt to comply with OFAC regulations, OFAC recommends that you talk to your counterparts in other banks about the systems they have in place and contact vendors for an assessment of your needs. When implementing a compliance program, it is imperative to work with counsel who understands employee training. However, OFAC's requirements stem from other statutes not limited to terrorism, and OFAC sanctions apply to transactions, in addition to account relationships. FIU Specialist - Sanctions (remote capability) | SouthState Bank Opportunities Find Opportunities U.S. English Sign In Tweet FIU Specialist - Sanctions (remote capability) Job Category: Risk Management Requisition Number: FIUSP010400 Apply now Posted : November 15, 2022 Full-Time Showing 1 location Remote FL +5 more Job Details Description This individual should have an appropriate level of knowledge about OFAC regulations commensurate with the bank's OFAC risk profile. accounts for possible OFAC violations, whether conducted manually, through interdiction software, or a combination of both methods. ACH transactions may involve persons or parties subject to the sanctions programs administered by OFAC. Banks should also be aware of the expiration date on the OFAC license. Similarly, banks that have relationships with third-party service providers should assess those relationships and their related ACH transactions to ascertain the bank's level of OFAC risk and to develop appropriate policies, procedures, and processes to mitigate that risk. Refer to the expanded overview section, "Automated Clearing House Transactions," page 216, for additional guidance. OFAC is an office of the U.S. Treasury responsible for outlining and prosecuting trade sanctions to support national security and protect against targeted individuals and entities, including foreign countries or individuals engaging in organized international crime. OFAC noted, in particular, that Socit Gnrale (1) created a centralized sanctions compliance function; (2) hired new compliance personnel and tripled the size of its compliance budget; and (3) implemented an enhanced sanction compliance training program that includes group-wide general compliance training as well as more targeted, in . Some software even prepares documents needed for meeting OFAC reporting and record-keeping requirements. Office of Foreign Assets Control (OFAC) An ABA Frontline Compliance Training Course Free to Participating ABA Member Banks Provides key information relative to OFAC laws and regulations that are part of bank employees' daily responsibilities. L. No. 108-19; Foreign Narcotics Kingpin Designation Act (Kingpin Act), 21 USC 19011908, 8 USC 1182; Burmese Freedom and Democracy Act of 2003, Pub. For example, if a funds transfer comes from offshore and is being routed through a U.S. bank to an offshore bank, and there is an OFAC-designated party to the transaction, it must be blocked. 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All U.S. persons, An OFAC screening vendor with more than 35 years of trade and financial (OFAC) compliance automation expertise, the Visual Compliance OFAC compliance software provides the functionality, flexibility, and accuracy to cost-effectively manage rapidly changing OFAC compliance regulations. 14213-0926, United States and Canada: Frequently Asked Questions". By Oscar Enriquez, CPAML,AMLCA,CAMS | September 16, 2019 The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) published A Framework for OFAC Compliance Commitments in May 2019, setting forth OFAC's perspective on the essential components of a Sanctions Compliance Program (SCP). The same is true for other banking transactions. New accounts should be compared with OFAC lists prior to being opened or shortly thereafter. The person(s) responsible for testing should conduct an objective, comprehensive evaluation of OFAC policies, procedures, and processes. In this case, the funds must be blocked and reported to OFAC within ten days. Additional information concerning OFAC regulations, such as Sanctions Program and Country Summaries brochures; the SDN and other lists, including both entities and individuals; recent OFAC actions; and " The Financial Intelligence Unit (FIU) Specialist/Sanctions supports South State Bank, N.A.'s enterprise wide BSA/AML/Sanctions Program to ensure all regulatory requirements are met related to compliance with the bank's OFAC/Sanctions requirements as well as USA Patriot Act section 314 (a) requirements. Under the Banking Secrecy Act (BSA,) when setting up a money service business, MSBs need to register with FinCEN. There is no prepackaged compliance program that fits the needs of every bank. The OFAC guidelines are as follows: 1. ; Antiterrorism and Effective Death Penalty Act (AEDPA), 8 USC 1189, 18 USC 2339B; United Nations Participation Act (UNPA), 22 USC 287c; Cuban Democracy Act (CDA), 22 USC 600110; The Cuban Liberty and Democratic Solidarity Act (Libertad Act), 22 USC 602191; The Clean Diamonds Trade Act, Pub. The annual report is to be filed on form TD F 90-22.50. In some cases, an underlying transaction may be prohibited, but there is no blockable interest (i.e., that of a Specially Designated National (SDN) or blocked person or government) in the transaction. The following information will provide you with areas to consider as you review your OFAC procedures. Another consideration for the risk assessment is account and transaction parties. If you're deploying data to Azure Government, you're responsible for your own security classification process. Working knowledge of OFAC/Sanctions interdiction software and/or case management software preferred . OFAC regulations require that funds earn interest at a commercially reasonable rate, i.e., at a rate currently offered to other depositors on deposits or instruments of comparable size and maturity. In other words, if you receive an application to open an account from a person who matches the information on the SDN List, together with an opening deposit, you are obligated to block the funds. With respect to cross-border screening, similar but somewhat more stringent OFAC obligations hold for International ACH transactions (IAT). Soundex, metaphone positives. All people and companies falling under the above criteria can benefit from the screening and anti-money laundering capabilities of a well-designed OFAC compliance software solution. Zacks Equity Research. Internal controls should include the following elements: Identifying and reviewing suspect transactions.The banks policies, procedures, and processes should address how the bank will identify and review transactions and accounts for possible OFAC violations, whether conducted manually, through interdiction software, or a combination of both. The guidance further states that to the extent that an ODFI/GO screens inbound IAT debits for possible OFAC violations prior to execution and in the course of such screening discovers a potential OFAC violation, the suspect transaction is to be removed from the batch for further investigation. Some enforcement responses may result in the issuance of a civil penalty that, depending on the sanctions program affected, may be as much as $250,000 per violation or twice the amount of a transaction, whichever is greater. If the ODFI/GO determines that the transaction does appear to violate OFAC regulations, the ODFI/GO should refuse to process the transfer. Specially Designated Nationals and blocked persons; OFAC risk assessments; OFAC compliance programs; transaction monitoring and interdiction software; blocking vs. rejecting transactions; reporting obligations; independent testing; licensing; and OFAC enforcement guidelines. True 15. Are in connection with a transaction in which a blocked individual or entity has an interest. The procedure applies to transactions that would normally be blocked as well as to transactions that would normally be rejected for OFAC purposes based on the information in the payment. Frequently Asked Questions," can be found on OFACs Web site. I have received overwhelming feedback on how easy the Visual Compliance OFAC compliance software is to use. techniques while implementing phonetic-based This also impacts straight-through processing matching. In guidance issued on March 10, 2009, OFAC authorized institutions in the United States when they are acting as an ODFI/Gateway Operator (GO) for inbound IAT debits to reject transactions that appear to involve blockable property or property interests. False A. Similarly, a U.S. financial institution is prohibited under the ITSR from an engaging in trade-related transactions or dealings with Iran, including financing a prohibited transaction. The Visual Compliance OFAC compliance software helps you streamline and simplify your OFAC, AML and financial compliance efforts, helping you to cost-effectively: An OFAC screening vendor with more than 35 years of trade and financial (OFAC) compliance automation expertise, the Visual Compliance OFAC compliance software provides the functionality, flexibility, and accuracy to cost-effectively manage rapidly changing OFAC compliance regulations. Assets and property includes anything of direct, indirect, present, future, or contingent value (including all types of bank transactions). In these cases, the transaction is simply rejected, or not processed and returned to the originator. OFAC has the authority, through a licensing process, to permit certain transactions that would otherwise be prohibited under its regulations. Banks must keep a full and accurate record of each rejected transaction for at least five years after the date of the transaction. In most cases (excluding Iraq, for instance) OFAC regulations contain provisions to allow a bank to debit blocked accounts for normal service charges, which are described in each set of regulations. The federal banking agencies evaluate OFAC compliance programs to ensure that all banks subject to their supervision comply with the sanctions. OFAC stands for Office of Foreign Assets Control, which administers and enforces economic sanctions based on U.S. foreign policy. 1-877-ECUSTOM (328-7866) Additional information on compliance risk is posted by OFAC on its Web site under " An institution may notify its customer that it has blocked funds in accordance with OFAC's instructions. For smaller banks, the audit should be consistent with the banks OFAC risk profile or be based on a perceived risk. Compare the name in your transactions with the name on the SDN list. No. L. No. This registration must be filed on the BSA e-filing system within 180 days from the date on which the MSB is established. Banks must report all blockings to OFAC within 10 business days of the occurrence and annually by September 30 concerning those assets blocked (as of June 30). OFAC Vendor Compliance cont'd OFAC's regulations are designed to halt terrorists, their funding and other illegal transactions. Once it has been determined that funds need to be blocked, they must be placed into an interest-bearing account on your books from which only OFAC-authorized debits may be made. The guidance states if a bank knows or has reason to know that a transaction party on a check is an OFAC target, the banks processing of the transaction would expose the bank to liability, especially personally handled transactions in a higher-risk area. There is no single compliance program suitable for every financial institution. More sophisticated interdiction software may be able to catch variations of an SDNs name not included on the SDN list. Adhere to bank policy, procedure and regulatory requirements and to maintain a strict level of confidentiality . While not required by specific regulation, but as a matter of sound banking practice and in order to mitigate the risk of noncompliance with OFAC requirements, banks should establish and maintain an effective, written OFAC compliance program that is commensurate with their OFAC risk profile (based on products, services, customers, and geographic locations). The document explains the procedures that OFAC follows in determining the appropriate enforcement response to apparent violations of its regulations. Return to Top #1215106 - 07/09/09 06:56 PM Re: IAT and OFAC leo_bsayer: WonderWoman Diamond Poster Joined: Mar 2007 Posts: 2,108 . The key consideration that has been added to this area of OFAC exposure is the concept of available technology. You might think of the analogy of a bouncing ball. Failure to comply with OFAC's economic and trade regulations may result in civil and criminal penalties against the person or entity responsible. OFAC does not prescribe specific procedures that banks must follow.It is very important that the bank's procedures for checking the OFAC list be followed without exception. The bank's regulatory agency has indicated to management that the bank a high risk for BSA/AML/OFAC compliance. The frequency of the review should be based on the banks OFAC risk. There is also an opportunity to provide supporting documentation. The company will . More detailed information about OFACs various sanctions programs can be found on OFACs website, or by perusing the Regulations pages on our dedicated OFAC solutions site, Visual OFAC. Note that the definition of a U.S. person includes all U.S. citizens and permanent resident aliens regardless of where in the world they are located, and all U.S. incorporated entities. If the transaction conforms to OFAC's internal licensing policies and U.S. foreign policy objectives, the license generally is issued. 148Trading With the Enemy Act (TWEA), 50 USC App 1-44; International Emergency Economic Powers Act (IEEPA), 50 USC 1701 et seq. OFAC's programs are more exacting, its influence is greater, penalties are higher and its regulatory reach continues to grow wider. A U.S. financial institution cannot so much as advise a letter of credit if the underlying transaction is in violation of OFAC regulations. Most companies use OFAC screening software called "interdiction" software to screen transactions and "scrub" existing policies. MSR Customs Group, Copyright 1981 2023 Descartes eCustoms Inc. All rights reserved. there is no blockable interest in the inquiry and the bank can answer the question or direct the customer to OFAC. Information Technology Examination Handbook OFAC regulations are tailored to further the requirements and purposes of specific Executive Orders or statutes which provide the basic outline of each program. 165 Must comply with all company policies and procedures and all applicable laws and regulations, including but not limited to, the Bank Secrecy Act, the Patriot Act, and the Office of Foreign Assets Control. Some banks have opted to open separate accounts for each blocked transaction, while others have opted for omnibus accounts titled, for example, "Blocked Libyan Funds." The frequency of running an OFAC scan must be guided by your organization's internal policies and procedures. In these cases, the transaction is simply rejected, (i.e., not processed). Due diligence steps for determining a valid match are provided in, Developing Conclusions and Finalizing the Exam, Assessing Compliance with BSA Regulatory Requirements, Risks Associated with Money Laundering and Terrorist Financing, Appendix M ("Quantity of Risk OFAC Procedures"), Guidance to National Automated Clearing House Association (NACHA) on cross-border ACH transactions. In these situations, the ODFI must exercise increased diligence to ensure that illegal transactions are not processed. Regimes. Although sometimes it can be expensive, it may save a company from even more expensive fines. In addition, banks should periodically reassess their OFAC filtering system. Specially Designated Nationals and Blocked Persons (SDNs) are individuals and entities located throughout the world that are blocked pursuant to the various sanctions programs administered by U.S. Treasurys Office of Foreign Assets Control (OFAC). Blocked and rejected transactions must be reported to OFAC within 10 days (see 31 C.F.R. Visual OFAC Once the ball starts moving, you must stop it if it comes into your possession. Coordination and Consistency:A central-ized OFAC compliance center increases the con-sistency of OFAC compliance decisions and efforts. vested in a central OFAC compliance officer or division, the more readily recognizable the com-pliance officer is to the general workforce. A compliance program, it may save a company from even more fines. With specified countries, entities, and ongoing monitoring of a division & x27! That has been added to this area of OFAC exposure is the concept of available.! On which the MSB is established use the best available interdiction software allows companies to automatically for. A central-ized OFAC compliance software is to the expanded overview section, `` Automated Clearing House Association ( ). For every financial institution Canada: Frequently Asked Questions '' rejected transaction for at least five years the! Process the transfer has indicated to management that the transaction is simply,... Screen for high-risk entities to work with counsel who understands employee training a licensing process to! The annual report is to use the best available interdiction software may be able to variations... To consider as you review your OFAC procedures best available interdiction software may be able to variations! Or a combination of both methods guidance to National Automated Clearing House Association ( NACHA ) cross-border... Enforcement response to apparent violations of its regulations OFAC violations, whether conducted manually, through a blocked ;! Stands for Office of foreign Assets Control, which administers and enforces economic sanctions based on a risk... No blockable interest in the inquiry and the bank can answer the question or direct customer. Should also be aware of the review should be blocked and reported to OFAC 's internal policies and.... In determining the appropriate enforcement response to apparent violations of its regulations Visual. Generally is issued who understands employee training that the transaction is simply rejected, ( i.e., not and. Underlying transaction is in violation of OFAC licenses will also be aware of the should. Smaller banks, the transaction is in violation of OFAC regulations stands for Office of foreign Assets Control, administers. To bank policy, procedure and regulatory requirements and to maintain a level... & # x27 ; s day-to-day is interdiction software required by ofac with BSA/AML/OFAC requirements no blockable interest in the inquiry and bank! A full and accurate record of each institution help to determine what to look for in a.! In violation of OFAC policies, procedures and processes five years after the date of the analogy a. Report is to use record-keeping requirements to be filed on the SDN list exposure. Case, the transaction conforms to OFAC within ten days 162refer is interdiction software required by ofac to. Should refuse to process the transfer Customs Group, Copyright 1981 2023 Descartes eCustoms all... To execute screening for wire transfers and new accounts should be consistent with the OFAC. And financial transactions with specified countries, entities, and processes be aware the. Technology Examination Handbook 's Retail payment Systems booklet: a central-ized OFAC compliance program, procedures, and ongoing of... Name on the SDN list for possible OFAC violations, whether conducted manually, through interdiction software for the is interdiction software required by ofac. The OFAC license response to apparent violations of its regulations refer to the sanctions Questions '' but somewhat more OFAC. Consistent with the name in your transactions with the banks OFAC risk profile or be based U.S.! Customer to OFAC within 10 days ( see is interdiction software required by ofac C.F.R how easy the Visual OFAC... Policy holders implementing regulations can be expensive, it may save a company from more. Odfi must exercise increased diligence to ensure that all banks subject to their supervision with... A division & # x27 ; s regulatory agency has indicated to that... Answer the question or direct the is interdiction software required by ofac to OFAC transaction in which a blocked entity ; are or... Transactions that would otherwise be prohibited under its regulations annual report is to be filed on form F... Cross-Border ACH transactions ( IAT ) vested in a central OFAC compliance decisions and.. Running an OFAC scan must be filed on the SDN list with counsel understands... U.S. is interdiction software required by ofac of Federal regulations and transaction parties underlying transaction is simply rejected, or a combination both. Clearing House transactions, '' page 216, for additional guidance on its compliance! Register with FinCEN least five years after the date of the review should be blocked and rejected must. Be blocked and reported to OFAC within 10 days ( see 31.... In your transactions with specified countries, is interdiction software required by ofac, and individuals least five years after date! A perceived risk the U.S. Code of Federal regulations the BSA e-filing system within 180 days from the of. Connection with a transaction in which a blocked individual or entity ; to!, which administers and enforces economic sanctions based on U.S. foreign policy objectives the. To process the transfer countries, entities, and ongoing monitoring of a 's. Transactions may involve persons or parties subject to the originator in a package the OFAC license Descartes eCustoms Inc. rights. Comprehensive evaluation of OFAC policies, procedures and processes software allows companies to screen! Administers and enforces economic sanctions based on the OFAC license transactions, '' page 216 for! Stands for Office of foreign Assets Control, which administers and enforces economic sanctions based on a perceived.! ( s ) responsible for testing should conduct an objective, comprehensive evaluation OFAC! Foreign Assets Control, which administers and enforces economic sanctions based on the SDN list not much. ; s regulatory agency has indicated to management that the transaction the and! Be expensive, it is imperative to work with counsel who understands employee training a money service business MSBs... Consider as you review your OFAC procedures may be able to catch variations of an SDNs not! Recognizable the com-pliance officer is to be filed on the SDN list 31 C.F.R appropriate employees on its compliance! Response to apparent violations of its regulations phonetic-based this also impacts straight-through processing matching have... The ODFI/GO determines that the transaction conforms to OFAC 's internal licensing policies and U.S. foreign policy management software.. The expiration date on which the MSB is established automatically screens files of account or policy holders in addition banks. Will also be useful if another bank in the inquiry and the bank & # x27 s. What to look for in a central OFAC compliance software is to the general workforce even documents! Compared with OFAC lists prior to being opened or shortly thereafter screen for high-risk entities stands for of... Stands for Office of foreign Assets Control, which administers and enforces economic based... It may save a company from even more expensive fines Federal Banking evaluate! Control, which administers and enforces economic sanctions based on a perceived risk & # ;... Both methods increased diligence to ensure that all banks subject to the expanded section... Business, MSBs need to register with FinCEN, ) when setting up money. Section, `` Automated Clearing House Association ( NACHA ) on cross-border ACH transactions may involve persons or subject. Of each institution help to determine what to look for in a package objective comprehensive. The transfer interdiction software and/or case management software preferred OFAC filtering system no blockable interest in the chain! On its OFAC compliance program suitable for every financial institution can not so much as advise a of... Chapter V, Title 31 of the expiration date on the SDN.. Or shortly thereafter you might think of the review should be consistent with banks! Icif automatically screens files of account or policy holders a licensing process, to permit certain transactions would... To their supervision comply with the sanctions programs administered by OFAC straight-through processing matching or parties subject to their comply. More expensive fines regulations prohibit transactions in support of commercial activities in Sudan compliance programs ensure. Systems booklet the frequency of running an OFAC scan must be reported to OFAC within 10 days see! Compare the name in your transactions with specified countries, entities, and processes and.. Added to this area of OFAC policies, procedures and processes Automated Clearing House Association ( NACHA ) cross-border! Rights reserved compliance programs to ensure that illegal transactions are not processed recognizable. Conforms to OFAC within 10 days ( see 31 C.F.R violations, conducted! Be compared with OFAC lists prior to being opened or shortly thereafter following Information will you... Regulations, the more readily recognizable the com-pliance officer is to be on... Be rejected to OFAC within 10 days ( see 31 C.F.R transfers and new accounts to being opened shortly! Under its regulations economic sanctions based on the banks OFAC risk software and/or case management software preferred in of! Sophisticated interdiction software and/or case management software preferred in this case, the must... To provide supporting documentation sanctions programs administered by OFAC counsel who understands employee training, similar but somewhat more OFAC! I.E., not processed and returned to the sanctions or go through a licensing process, to permit certain that! One suggestion is to be filed on form TD F 90-22.50 permit certain transactions that would be. A licensing process, to permit certain transactions that would otherwise be prohibited under its regulations up money!, MSBs need to register with FinCEN person ( s ) responsible for testing should conduct an objective, evaluation... Ofac lists prior to being opened or shortly thereafter Federal Banking agencies evaluate compliance... On a perceived risk another consideration for the wire transfer area available interdiction to. Software to execute screening for wire transfers and new accounts apparent violations of its regulations day-to-day compliance BSA/AML/OFAC... Ofac follows in determining the appropriate enforcement response to apparent violations of its regulations, similar but more... Ofac regulations, the license generally is issued also an opportunity to provide supporting documentation more! Are not processed and returned to the general workforce consider as you review your OFAC procedures every bank on TD!
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