Customer Service Is Not Enough

It may seem we're hitting often on the subject of OFAC.

One of the reasons is because I have been doing a semi-casual survey of front line employees this fall in my Bank Secrecy Act and security/robbery response training workshops and seminars. Just for my own edification, I've coaxed people into not being embarrassed-but just to let me know-how many in the room or auditorium have never heard of OFAC?

I've been astonished?and dismayed?at the response. Fully two thirds of the front line young bankers who attend my sessions raise their hands. They've never heard of OFAC!

It is the responsibility of these employees on the front line, many-actually most-of whom open accounts during their daily duties, to protect our institutions against the infiltration of those individuals with whom we are forbidden to do business. If one of them opens an account with you, the government will not even begin to tolerate, "I didn't know" as an excuse.

The penalties for violating the OFAC regulation are horrendous. Civil penalties up to $250,000 per count. Criminal violations can result in corporate and personal fines of up to $1 million and 12 years in jail.

We've been doing a good job training our people to cross-sell. Indeed, how else can you stay in business? But customer service skills are no longer enough to guarantee a good, profitable, healthy financial institution.

Along with the sales skills, the front line needs to be up to speed on identification and verification knowledge, trained to recognize money laundering red flags, aware of disclosure requirements, sensitive to discriminatory attitudes and statements, cognizant of reporting requirements, and now also alert to any attempt to do business with "Specially Designated Nationals and Blocked Persons" (SDNs).

Tellers are not off the hook with ignorance about OFAC, either. Suppose a customer gives instructions to wire $300 from his account to a relative in Cuba. The customer's account should be debited and a blocked account established in the amount of $300.

Or suppose another customer attempts to cash a draft drawn on the account of an individual on the books of Rafidain Bank, Jordan. Although neither Jordanian nor Iraqi non-SDN nationals are blocked, the draft itself is blocked because it is drawn on a blocked bank.

I've been attending the national conferences and seminars on compliance during the past months and have discovered that all of the regulatory examiners are being brought up to speed as to what to ask and what to look for to be sure the financial institutions they are auditing are prepared to deal with OFAC. Be ready for them.

Copyright © 1997 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 10, 8/97