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#350781 - 04/25/05 01:07 PM
Re: OFAC and property sellers
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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You cannot transact or facilitate the transaction of business with anyone on the OFAC list. How far you take this is really up to your bank's risk assessment. Technically, I would not want to be caught in a situation where the proceeds of a loan went to a blocked party, but again, it's a risk assessment issue. The risk of it happening in NYC might be different than in rural Iowa which may generate different procedures.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#350783 - 04/25/05 06:01 PM
Re: OFAC and property sellers
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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Sounds like a "pet" criticism, one they can carry around and use in many, many banks.
I'm just wondering what they think the practical effect of getting a hit on the seller is when the bank's customer is the borrower. Clearly, they won't consumate the loan, so no funds will be blocked. Rather than RANT, I will simply say any "necessary" OFAC review on the seller needs to be done early in the application process - you don't want to be at the closing when the issue arises.
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#350784 - 04/25/05 11:27 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Is this new? Let's review! A customer comes to me for a mortgage and I have to verify the names of the parties selling the property to my customer? With automated systems how are you doing this, document it, and where is this written as a requirement? I'm not doing business with the seller, I'm dealing with a broker that is cleared through OFAC.
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#350786 - 04/26/05 02:27 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Quote:
... We sit here and enter known local entities day after day, when OFAC is the Office of FOREIGN Asset Control, and you know that your local Title Company is not on the list and never will be because Uncle Joe up the road owns the company....
Not to make too fine a point of it, but the actual name is Office of Foreign Assets (plural) Control.
You do have to know a little bit of history to understand why that is. If you want to laugh instead become aggravated, just remember that the predecessor organization was called the Office of Alien Property. Should the saucers land, maybe it will be called that again  .
The reason you're checking Joe's title company, even though he's been up the street for years, is that, even though he's good old Joe, always gets his coffee over at Ozzie's before opening up the office, he gives 30% of his income to Sinn Fein. Or, his company seems to own a marijuana field in the Russian steppes the size of Rhode Island...Or, just other stuff you wouldn't necessarily know about.
If you want to be annoyed about OFAC scanning, you should be annoyed that the Executive Order transformed you into a junior G-Man and you didn't get the cool decoder ring to go with it. 
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#350787 - 04/26/05 03:08 PM
Re: OFAC and property sellers
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Power Poster
Joined: Oct 2000
Posts: 5,991
Soaring over Georgia
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This is an issue I've heard from several banks. It seems the OTS is the one agency pressing the hardest to require its institutions to check the seller in a real estate transaction. Of course, why they don't then require the bank to check the seller in all purchase money lending transactions (such as auto purchase loans) is beyond me.
Even if the seller is on the OFAC list, the bank making a loan to Jim Bedsole who is not on the list is not a violation of OFAC. Even if the bank knows that Jim is going to take the money and turn around and buy 40 acres of prime real estate in Kabul from Osama bin Laden, has the bank violated OFAC? I don't think so. Jim certainly has violated OFAC if he does this. You could even make a case that the attorney closing the loan and issuing the proceeds check to Osama violated OFAC. But it think it is a real stretch to say the bank violated OFAC.
What if the seller is on the list under a sanctions program that requires blocking of assets. If the bank makes the loan did it ever have in its possession any assets of the SDN to block? In making the loan did the bank release any assets of the SDN? If the answer to those questions are no, then no violation occurs.
It seems to me that there are a lot of other areas where banks are not checking names that have a higher potential of an actual OFAC violation occurring than with the seller of real estate. That's whee the OTS should be focusing its efforts.
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Jim Bedsole, CRCM, CBA, CFSA, CAFP
My posts - my opinions
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#350788 - 04/26/05 05:31 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Quote:
....It seems the OTS is the one agency pressing the hardest to require its institutions to check the seller in a real estate transaction. Of course, why they don't then require the bank to check the seller in all purchase money lending transactions (such as auto purchase loans) is beyond me.
Who says they're not?
Quote:
Even if the seller is on the OFAC list, the bank making a loan to Jim Bedsole who is not on the list is not a violation of OFAC. Even if the bank knows that Jim is going to take the money and turn around and buy 40 acres of prime real estate in Kabul from Osama bin Laden, has the bank violated OFAC? I don't think so. Jim certainly has violated OFAC if he does this. You could even make a case that the attorney closing the loan and issuing the proceeds check to Osama violated OFAC. But it think it is a real stretch to say the bank violated OFAC.
To the extent that you believe the attorney to have violated the executive order, the bank has as well. The wording includes "facilitated". Granted, the buyer is the once actually handing money to an SDN, but the bank loaned him the money. I personally wouldn't want to be the one arguing with Treasury that it didn't count as 'facilitated'. And I suppose that falls under the heading of 'risk tolerance', if you don't mind having that argument, then go on ahead.
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What if the seller is on the list under a sanctions program that requires blocking of assets. If the bank makes the loan did it ever have in its possession any assets of the SDN to block? In making the loan did the bank release any assets of the SDN? If the answer to those questions are no, then no violation occurs.
I think you're venturing out where the buses don't run. If the property owner is a match under a program that requires blocking of assets, why would you lend money to someone for the purchase of property of which they cannot take possession. Do you lend money for property where clear title cannot be established?
By refusing the loan, you've 'blocked' the asset as best you can. You've not allowed it to be transferred or coverted to cash. If you make the loan, under your theory, you've facilitated the transfer of the asset, and put cash in the hand of an SDN, and have a customer that owes you money, but cannot take possession of the property they think they bought. Nice day's work. 
Quote:
It seems to me that there are a lot of other areas where banks are not checking names that have a higher potential of an actual OFAC violation occurring than with the seller of real estate. That's whee the OTS should be focusing its efforts.
"Don't do business with..." doesn't have a lot of gray area to it. Banks, and every other kind of business in the US, has to do their own risk assessment, model their potential for OFAC violation, and take appropriate steps. My impression of Treasury's approach (in a previous life, I worked OFAC compliance for an insurance company), is that they've done their own assessment of the industries/sectors at greatest risk for OFAC violation. They started at the top of that list and are marching their way down. Personally, I think supermarket customer loyalty cards/programs are a pretty damn smart preparation for retail sales OFAC compliance. 
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#350789 - 04/27/05 11:51 AM
Re: OFAC and property sellers
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Power Poster
Joined: Apr 2003
Posts: 3,003
Fort Lauderdale, Florida
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Quote:
The reason you're checking Joe's title company, even though he's been up the street for years, is that, even though he's good old Joe, always gets his coffee over at Ozzie's before opening up the office, he gives 30% of his income to Sinn Fein. Or, his company seems to own a marijuana field in the Russian steppes the size of Rhode Island...Or, just other stuff you wouldn't necessarily know about.
Joe supporting Sinn Fein or owning a marijuana field in the Russian Steppes is not something that I should be expected to know or discover - and since Joe is an American he is not going to be on the OFAC list!
I am a Banker - not IRS, ICE, FBI, or Homeland Security.
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#350790 - 04/27/05 12:48 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Quote:
Quote:
The reason you're checking Joe's title company, even though he's been up the street for years, is that, even though he's good old Joe, always gets his coffee over at Ozzie's before opening up the office, he gives 30% of his income to Sinn Fein. Or, his company seems to own a marijuana field in the Russian steppes the size of Rhode Island...Or, just other stuff you wouldn't necessarily know about.
Joe supporting Sinn Fein or owning a marijuana field in the Russian Steppes is not something that I should be expected to know or discover - and since Joe is an American he is not going to be on the OFAC list!
I am a Banker - not IRS, ICE, FBI, or Homeland Security.
You're absolutely right, you're not expected to know that much about Joe. Unless he's your customer. Or your customer's customer. Or unless the US Treasury asks that you check to make sure you're not doing any business with Joe. *They* might actually know whether Joe gives money to Sinn Fein, or owns the Russian marijuana farm.
I'm sort of flummoxed at your assertion that Joe won't be on the list because Joe's an American. Why would that stop Treasury from adding his name to the list? Similar sanction lists in the UK, EU and Japan include members of organized crime families along with terrorists, terrorist fund-raisers and narcotics traffickers. In that nexus of drug trafficking, arms dealing and terrorist financing where organized crime sits, I'm surprised that the American OFAC list isn't already littered with organized crime notables.
Other than apparent aggravation, I don't know what advantage you can derive from the notion that only foreigners are on the OFAC list. What part of deveoloping OFAC compliance strategies and tactics is advanced by that belief?
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#350792 - 04/27/05 01:54 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Quote:
Quote:
I'm sort of flummoxed at your assertion that Joe won't be on the list because Joe's an American. Why would that stop Treasury from adding his name to the list?
Well Anon - I think it is because it is called the Office of FORIEGN Assets Control - can you say duh?. You know, you should really read what you post occassionally. Your logic is a little flawed
Perhaps not as flawed as your spelling.
I will grant that I've 'disconnected' the name of the office from the maintenance of a SDN, SDGT, Narco-trafficking, CTF watchlist. Joe sends stunningly huge amounts of money annually to Sinn Fein or Hezbollah. You're suggesting that his US citizenship would somehow prevent Treasury from adding his name to the watchlist? How?
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#350793 - 04/27/05 02:22 PM
Re: OFAC and property sellers
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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Well, conveniently issued by OFAC yesterday (4/26) is the "GOTCHA" for the argument about "American" being somehow a talisman against OFAC listings. In the updated Liberian program SDN list, what do we see?
DAYTONA POOLS, INC., 225 Syracuse Place, Richardson, TX 75081 [LIBERIA]
I'll bet there's at least one bank in the Lone Star state that was banking this company.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8
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#350794 - 04/27/05 02:27 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Quote:
Well, conveniently issued by OFAC yesterday (4/26) is the "GOTCHA" for the argument about "American" being somehow a talisman against OFAC listings. In the updated Liberian program SDN list, what do we see?
DAYTONA POOLS, INC., 225 Syracuse Place, Richardson, TX 75081 [LIBERIA]
I'll bet there's at least one bank in the Lone Star state that was banking this company.
And it probably isn't a stretch to wonder if CapitalOne, MBNA, or American Express have issued them corporate credit card(s), as well.
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#350795 - 04/27/05 03:31 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Alot of comments on this one. Bottom line, you guys are all checking the sellers. Manually?
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#350796 - 04/27/05 03:50 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Sorting the csv file by country and address, it would appear that Richardson TX is second only to Miami FL in US entries on the OFAC list.
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#350797 - 04/28/05 03:23 AM
Re: OFAC and property sellers
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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I think that few banks are checking the sellers in real estate transactions financed by the bank.
And actually, I still don't think that you can point to an American citizen on the OFAC list. Companies with addresses or individuals with last know addresses in the US - sure, but no American citizens. So the argument concerning Joe American, I believe is still valid.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#350799 - 04/28/05 12:19 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Yes, the OTS is also asking you to check the sellers of consumer goods...at least that's what they have asked of us!
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#350800 - 04/28/05 12:22 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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Quote:
...And actually, I still don't think that you can point to an American citizen on the OFAC list. Companies with addresses or individuals with last know addresses in the US - sure, but no American citizens. So the argument concerning Joe American, I believe is still valid.
To KayBe's point above, there are currently 4 US citizens on the OFAC list (It looks like 10, but once you resolve the aka's, it's 4).
To your point, you haven't actually made an argument about why American citizens can't be on the OFAC list. (Somewhat moot, since there *are*, but I anticipate you'll argue that the 4 citizens currently on the list aren't really Americans.) You've simply asserted that they can't be added to the list. If you want to make a case explaining why Treasury couldn't add US citizens to the list, or what would prevent them from doing so, then go right ahead. Up until then, it's just an opinion, and one that is contradicted by the facts on hand.
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#350801 - 04/28/05 12:48 PM
Re: OFAC and property sellers
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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Uncle.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#350803 - 04/28/05 02:30 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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I heard the same thing - and after some research found that the title company actually runs the search on all parties (buyers and sellers). As long as that search is part of your title binder, I think you're ok. [color:blue] [/color]
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#350804 - 05/03/05 03:47 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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heard the same thing - and after some research found that the title company actually runs the search on all parties (buyers and sellers). As long as that search is part of your title binder, I think you're ok.
Is this really happening in all title companies?
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#350805 - 05/03/05 06:10 PM
Re: OFAC and property sellers
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New Poster
Joined: Aug 2004
Posts: 1
Milwaukee, WI
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My title company told me that they only running the seller against the OFAC list if they are disbursing the funds. They also said that the title underwriters do not agree on the proper procedures and are giving the agents different direction and that subsequently many title agents are not doing any OFAC check on sellers.
Are other banks checking the recipients of funds on refinances or on credit card balance transfers too?
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#350806 - 05/03/05 08:43 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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When they were last in here, they said we need to be doing an OFAC check on the sellers of consumer goods and the sellers of real estate. I kid you not.
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#350808 - 05/04/05 08:07 AM
Re: OFAC and property sellers
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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Tell it Bonnie, say it loud!
Over the last few years OFAC has ramped up from being the acronym nobody ever heard of to the biggest waste of time and resources in the industry. I have no choice but to continue saying that it's "risk based," but the reality is that it's paranoia based.
Banks can be told they need to look at people sending and receiving wire transfers, publicly traded companies opening new accounts, vendors, checks cashed over the counter, cashiers checks, real estate sellers, and perhaps now to monitor whether Circuit City checks its buyer before it delivers that big screen. (Frankly, I see no reason why banks should not be told they need to check payees on inclearing items.) The "advice" can be profoundly stupid, as would be the case in the preceding parentheical, but there is no way to counter it because the whole thing is so vague.
OFAC's like the old movie "The Blob," it just keeps spreading out...
Last edited by Ken_Pegasus; 05/04/05 12:16 PM.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#350810 - 05/21/05 02:20 PM
Re: OFAC and property sellers
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100 Club
Joined: Mar 2005
Posts: 126
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None of the title companies that we deal with are doing this.
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#350812 - 05/23/05 05:42 PM
Re: OFAC and property sellers
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Anonymous
Unregistered
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