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#116705 - 09/23/03 03:15 PM Ofac tracking
Anonymous
Unregistered


Traditionally we have used Chex System for Ofac checking when opening an account and would receive notification within 24 hours if we had a name match. We will change to a new system soon "Ofac Tracker" that will give us an instant notification if there is an OFAC match and I am not sure what the new account person should do, open the account or not open the account?

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BSA/AML/CIP/OFAC
#116706 - 09/23/03 04:19 PM Re: Ofac tracking
mrenderman Offline
100 Club

Registered: 05/01/03
Posts: 123
Loc: Wisconsin
Need to have clarification on what you mean by should the new accounts people open the account or not. If there is a match on the OFAC list typically you will probably refuse to open the account and receive further instructions from their office. If there is no match found, document that in your file and allow the account to be opened.
If I completely missed the purpose of your questions, please reply and I will try to help.

Michelle R.

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#116707 - 09/23/03 04:31 PM Re: Ofac tracking
Georgia Golfer Offline
Gold Star

Registered: 06/27/03
Posts: 415
Loc: 1st Tee
But an OFAC hit is not the same as a Chex Systems hit. Unless I'm wrong, I would think that the account should be opened as if nothing is wrong and after the would be customer leaves, place a call to your friendly neighborhood OFAC office. I wouldn't want to tell Johnny Drug Dealer that we're not opening his account because he's blacklisted. Right or wrong?

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#116708 - 09/23/03 04:32 PM Re: Ofac tracking
Anonymous
Unregistered


I thought you were supposed to open the account so you could freeze the funds.

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#116709 - 09/23/03 04:37 PM Re: Ofac tracking
mrenderman Offline
100 Club

Registered: 05/01/03
Posts: 123
Loc: Wisconsin
For the last two posts on this subject, I think that from what I understand is that the Chex System is checking the actual OFAC list just like our credit bureau does it for us. For business entities we are using the ofac website to verify if they are on the list or not. Also from what I understand is that if they are on the list, the bureau will give you instructions when you call to verify the hit, if you refuse to open the account or if you should open it and freeze the funds in the account. This is the procedures that we are using. I hope someone else jumps in and lets us know if we are on the wrong track.

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#116710 - 09/23/03 05:32 PM Re: Ofac tracking
DEL Offline
Platinum Poster

Registered: 10/30/02
Posts: 646
We use Chexsystems or NCPS when opening new deposit accounts. If there is a "hit" we usually aren't notified soon enough to refuse to open the account. That is OK with us because 1) OFAC could instruct us to freeze the funds rather than refuse to open the account and 2) we don't want to put our new accounts person in the awkward position of telling a possible drug dealer/terrorist/general bad guy face-to-face that we won't open the account because we think he's a drug dealer/terrorist/general bad guy. I say even if the info is available immediately, open the account anyway and then do your legwork to confirm. Most of the "hits" don't turn out to be real matches anyway.

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#116711 - 09/25/03 12:19 PM Re: Ofac tracking
complyguy Offline
Gold Star

Registered: 05/23/01
Posts: 494
Loc: PA
Quote:

and 2) we don't want to put our new accounts person in the awkward position of telling a possible drug dealer/terrorist/general bad guy face-to-face that we won't open the account because we think he's a drug dealer/terrorist/general bad guy. I say even if the info is available immediately, open the account anyway and then do your legwork to confirm.




If I remember past posts correctly, many of us have the same attitude about OFAC and deposit accounts. However, our regional OCC office just quoted from the OFAC Q&A that "A U.S. bank cannot open an account for a person named on the SDN list. This is a prohibited service..."

Even the examiner said she had thought that we should open, then freeze, deposit accounts.

We wrote our CIP procedures and trained with this understanding - gotta do some serious scrambling, unless one of you can find a contradictory cite from OFAC.

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#116712 - 09/25/03 04:23 PM Re: Ofac tracking
GreatBlue Offline
Diamond Poster

Registered: 02/12/03
Posts: 2362
Loc: Colorado
Could you consider the account "provisionally" opened until you have completed all your checks? I still think OFAC would rather have the money.
_________________________
Opinions are mine and not necessarily my employer's.

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#116713 - 09/26/03 09:23 AM Re: Ofac tracking
complyguy Offline
Gold Star

Registered: 05/23/01
Posts: 494
Loc: PA
Quote:

Could you consider the account "provisionally" opened until you have completed all your checks? I still think OFAC would rather have the money.




Great Blue - I really wish it were that way, but the OFAC Q&A & our OCC were pretty clear. Anyone else care to weigh in? Especially if you can quote sources that indicate we should open, then freeze...

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#116714 - 09/26/03 12:36 PM Re: Ofac tracking
GreatBlue Offline
Diamond Poster

Registered: 02/12/03
Posts: 2362
Loc: Colorado
Here are a couple of excerpts from OFAC's FAQ . The answer to the first question clearly indicates that the check must occur prior to account opening, but the answer to the 2nd says " The important thing is not to conclude transactions before the analysis is completed. " I think this is what I interpolated in my thinking into meaning you could consider the account not truly opened until you had completed your checks.

" What do I do if a person tries to open an account and the person's name is on OFAC's SDN list? Do I open the account and then block the funds?

A U.S. bank cannot open an account for a person named on the SDN list. This is a prohibited service. However, you should pay careful attention to be sure the person trying to open the account is the same person as the one named on OFAC's list. In many cases you may get a "false positive," where the name is similar to a target's name, but the rest of the information provided by the applicant does not match the descriptor information on OFAC's SDN list. If the bank does come into the possession or control of any property in which a blocked person has an interest, it is obligated to block that property. 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. The same is true for other banking transactions. If, for example, a customer asks if he or she is allowed to send money to a relative's account with Rafidain Bank in Iraq, the bank can say "no, that's illegal." If, on the other hand, a bank receives instructions from its customer to debit his or her account and send the funds to Rafidain Bank, the bank must act on the instructions by blocking the funds which contain a future interest of the Iraqi SDN bank. You might think of the analogy of a bouncing ball. Once the ball starts moving, you must stop it if it comes into your possession. [09-10-02]

Does a financial institution need to scan names against OFAC's list of targets upon account opening or can it wait for 24 hours to receive a report from its software vendor on whether or not there is a hit?

There is no legal or regulatory requirement to use software or to scan. There is a requirement, however, not to violate the law by doing business with a target or failing to block property. OFAC realizes that financial institutions use software that does not always provide an instantaneous response and may require some analysis to determine if a customer is indeed an SDN. The important thing is not to conclude transactions before the analysis is completed. [09-10-02]"

_________________________
Opinions are mine and not necessarily my employer's.

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#116715 - 09/26/03 01:34 PM Re: Ofac tracking
complyguy Offline
Gold Star

Registered: 05/23/01
Posts: 494
Loc: PA
Great Blue - Yes, I read the second question, too. I guess my concern would be trying to explain to an examiner that the account wasn't really opened until our search was completed.

Maybe I'm missing something here - actually, I hope that I am. Anybody else gonna roll the dice and do the search after the account is "opened"?

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#116716 - 09/26/03 01:41 PM Re: Ofac tracking
MackenzieS Offline
Diamond Poster

Registered: 07/08/02
Posts: 1722
Loc: Oklahoma
We use the OFAC Tracker as well. Every new account, loan, trust account must be verified through the system prior to the account being established. The employee must print out the results of the search and attach it to the account documentation to ensure compliance with the OFAC requirements.

Now to the controversial issue about opening the account vs. refusing the account. We have talked with our employees and trained them to assess the situation, if they ever have a situation where they might feel that it would put any employee in jeopardy, they are to open the account and let the customer leave. I will take a fine by the government over risking the chance that harm may come to one of our employees. Case closed.

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#116717 - 09/27/03 04:27 AM Re: Ofac tracking
VT Banker Offline
Member

Registered: 09/10/01
Posts: 70
Loc: VT, USA
Quote:

We use the OFAC Tracker as well. Every new account, loan, trust account must be verified through the system prior to the account being established. The employee must print out the results of the search and attach it to the account documentation to ensure compliance with the OFAC requirements.

Now to the controversial issue about opening the account vs. refusing the account. We have talked with our employees and trained them to assess the situation, if they ever have a situation where they might feel that it would put any employee in jeopardy, they are to open the account and let the customer leave. I will take a fine by the government over risking the chance that harm may come to one of our employees. Case closed.




AMEN! Same here.

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