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OFAC Check on the Remitter
Answer by John Burnett, BOL Guru
Guru Bios
Question: For OFAC purposes when we sell a cashiers check to a non customer we have begun to search OFAC on the remitter and the payee. If we sell to a customer do we have to check the remitter also since the person is our customer and they are checked at each new account opening and scanned through our data base monthly? We disburse loan proceeds by cashiers checks, do we need to check our self (the bank) on OFAC as the remitter?
Answer: Whether your bank requires you to check specific parties on specific types of transactions is a risk-management decision, not a regulatory requirement. The bank is forbidden to do business with thousands of persons under laws and OFAC regulations. Checking names against the OFAC lists is a risk-avoidance process.
Your bank probably does not need to require a check of purchasers who are existing bank customers, for exactly the reasons you have suggested. As for the idea that the bank might need to check the cashier's check remitter when it is disbursing loan proceeds, I'd take a slightly different approach. Obviously, the bank isn't going to be listed (if it is, you might consider looking elsewhere for work). However, banks often don't think about checking borrowers' names or other parties to whom loan proceeds checks might be payable.
Providing loan proceeds to an OFAC-barred person is just as much a problem as allowing any other form of payment. If the payee is a customer who is routinely checked against the list along with all the others in your masterfile, your OFAC risk is very small, but if the borrower or other payee is not already on your system, your exposure is greater, and your risk analysis should consider whether checking these names is needed.
First published on BankersOnline.com 11/06/06
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