Does anyone currently verify the payee on Cashier Checks purchased to the OFAC list? I am wondering how this will work being that when given the name of the payee, that's all the information we have on the payee - without a birth date, a social security number, etc., won't this make it harder to verify if there is a possible hit? What are you doing about this aspect of the OFAC regs?

I may be incorrect, but we are not verifying the payee at this time.

Doesn't OFAC require that we do this?

What OFAC requires is that we not do business with any entity on their list. Each bank should tailor their procedures to compensate for risk. It's not required to verify this, but if you accidentally make a check out to someone on that list you could be sanctioned.

Skittles is right. OFAC doesn't require any particular procedure be followed. It simply prohibits transactions with SDNs. So, your bank should determine what the risks are for the various types of transactions and compare them to the costs involved in checking every one of those transactions. Checking cashier check payees is difficult and the risk that you might sell a cashier's check payable to someone on the list may not justify the costs that would be involved in checking every name.

OFAC published a Q & A that addresses this issue among others. The relevant portion indicates:

Does my bank need to check the OFAC list when selling cashier's checks and money orders? In the case of cashier's checks, do I need to check both the purchaser and the payee? As a mortgage lender, do I need to check both the purchaser and the seller's name against the SDN list

Every transaction that a U.S. financial institution engages in is subject to OFAC regulations. If a bank knows or has reason to know that a target is party to a transaction, the bank's processing of the transaction would be unlawful. [09-10-02]?


As noted by previous posters, the decision to check payees and any remitters who are non customers on cashiers checks sold is "risk based." Failing to check the list involves risk. Some banks mitigate the risk by not selling monetary instruments to non customers. Some also conclude the cost and effort involved in checking payees may be out of proportion to the remaining risks.

At the 8-17-05 FFIEC InterAgency Regional Outreach Meeting on BSA/AML held in Dallas, the lady OFAC regulator, Barbara Hemmerle, said banks SHOULD be checking the payee names against their list. Period!! Ugh!!