Our bank in talking about possibly making a policy where we would not be able to do any transactions for none customers, due to the added time it will take to check them against the OFAC. My question is,will we have to check the people that our customers are making the cashier checks out to? Do all second parties have to be checked against OFAC?

Thank you

As others have stated in previous OFAC discussions, the rules do not specifically REQUIRE OFAC checking, but it is rather a risk-based process. Checking payees of Cashier's checks is probably a good idea. Checking all 2nd parties, such as payees of on-us checks would be next to impossible for most institutions because of sheer volume and the fact that it would have to be a manual process.

When you say "Not do any transactions for non-customers," do you mean wires, traveler's checks, cash advances, cashier's checks? Many banks do not allow non-customers to originate or receive wires or purchase Cashier's checks. Cash advance refusal, however, violates agreements with Visa/Mastercard/Discover.

We do limited transactions for non-customers. We do check them against the OFAC list. The tellers do it at their stations online and does not take a lot of time if you have it in the "Favorites". We check payees on bank checks but do not check payees on On Us checks.

Are we required or is it recommended that an OFAC check be done on both senders and receivers of wire transfers that are customers? I was informed that this needed to be done and I was under the impression if it was a customer it was not necessary. What are your thoughts?

Your CIF of customers should be checked whenever the OFAC list is revised, so you should not concern yourself with checking your customers on wire transactions, only the other parties (including banks).

Devsfan - not a good stance to take. Most banks run their CIF OFAC check overnight, the night that the list is updated. If a new list is published at 10:00 AM today, and you do not check the list until tonight, you run the risk of sending out a wire today. Granted, the chance is slim, but why take it.

With the number of automated programs available, it only takes a moment to run the check on all parties involved in the wire. Take those few seconds for peace of mind.

You do an OFAC check each time you do a wire transfer for your customer?

Easiest thing to do is to purchase software that automatically checks all parties on a wire transfer. FundTech offers this, and I'm sure other wire transfer software providers offer this as well.

We have WATCHDOG software for this purpose, but I didn't realize that it was necessary to do an OFAC check on existing customers when they want a wire transfer.

Prior thread with many of the same contributors. No one here is saying it is necessary or required to check your customers against the OFAC list when they oringate a wire. However, several, including me, are saying it is a grossly unreasonable assumption of risk not to check every single element of an outgoing wire, including your own customer's name.

It's cost vs. risk.

By the way, "OFAC Checking" is the new consumer product I'm thinking of pitching to major retail banks. Sounds kinda catchy don't-cha think?

yes, we check each and every in and out

Just have to chime in... we check every party, every time. This process takes a total of 30 seconds... no time at all compared to the potential penalties for not checking...! You never HAVE to check OFAC...

I guess what I'm getting at is this: If this is already a customer they were "OFAC CHECKED" at the time their account was opened, if not they would be checked when we run our base every 6 months. Isn't this overkill (not that its a big deal) just curious or am I really missing something here.

I don't think it's overkill because the OFAC list is usually updated many times each month, and if you are only checking your database once every 6 months, you could miss something. We were checking our database against the OFAC list once a quarter and were criticized by our examiners that this was not frequent enough.

We just got software to do our database check every time the OFAC list changes and we check every party for wires also. We are a small bank but OFAC is hot now!!

I don't think what you are doing is sufficient because an entity can be added to the OFAC list at any minute any day. Everytime the OFAC SDN list changes we do an entire database scan which is made easy by our provider Jack Henry. Everytime an account is opened, including loans, an OFAC check is done. Every wire that is handled, an OFAC check is done...........

If you are only checking every 6 months, you leave yourself wide open. Last year, there were 22 updates to OFAC, roughly one every 2 weeks. You need to scan your database with each OFAC update that is issued.