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#363370 - 05/24/05 08:58 PM OFAC check
berico Offline
Gold Star
Joined: Jun 2004
Posts: 290
California
We do an OFAC check on payees of official checks, including sellers of real property when we send a check directly to them. What is your opinion on checking sellers of real property if the money is sent to an escrow, and funds are transferred by the escrow company? If the person is on the OFAC list, aren't we "transacting business" with them, albeit through an escrow?

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#363371 - 05/24/05 10:08 PM Re: OFAC check
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,844
Pulling people out of the ditc...
yes
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Providing alternative truths since the invention of time

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#363372 - 05/25/05 10:07 AM Re: OFAC check
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Here's the relevant Q & A from the OFAC web site:

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.


This is my career favorite piece of "regulatory speak." Please note that it does not actually answer the question, it just appears to say, "Yes." It suggests that making a check payable to an SDN, even at the direction of a third party with the third party's funds, is the equivalent of dealing with the SDN in violation of the sanctions. That's an interesting, unsupported leap, but it's one they are prepared to make. Many examiners believe this is a directive, not an observation.

To my knoweldge, these folks have never said any proposed transaction was not subject to OFAC. I'm confident they would say the the presence of an escrow relationship did not work as a "blind" in your circumstance.

However, I'm equally confident they would say that a commercial vendor picking up the trash at an SDN's house or Circuit City's selling him a 9 volt battery was in violation of the sanctions. The answer is always, "Yes."

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