Our Operations Manager just came back from a round table with other banks. She found out that when the other bank's customers purchase cashiers checks and have them made out to third parties, that they run the payees names through OFAC first. They do this for cashiers checks and money orders.

Does anybody else do this? We are not a large bank and to think of the tellers running names through OFAC would just be crazy. They would take forever to run transactions! Of course this makes me very nervous as we have never done it and they said that they ALL did it this way.

It all comes down to your risk assessment since there is no regulatory requirement to check any specific transaction. If you sell checks to non-customers, if you sell a large volume of checks, if you sell check for large dollar amounts, these are all factors for consideration in your risk assessment. There is no cost effective one-size-fits-all solution to OFAC.

We are a $3.5B bank and we run OFAC on all cashier checks. The names are put into our core operating system before they are printed on the checks, so we just grab the names from the operating system and run through Bridger. This was "strongly suggested" from our Examiners.

Our is run after the check is issued, so we usually resolve soft hits by looking at the first bank of deposit, or calling the customer who purchased it for a third party and asking where they sent the check. The location usually helps to eliminate the SDN soft matches.

Unfortunately, BGAH, that's a great deal like closing the barn door after the horse has escaped. In the unlikely event that you get a true SDN match, do you plan to refuse payment on the cashier's check? How will you handle the problem if the check is presented by a holder in due course, not the SDN, with the legal right to enforce payment?

Or will you just notify OFAC of the transaction and ask for mercy?

We did this at my "old" bank. Actually we found it to require very little additional time. The majority of our checks were issued to established customers or known government entities, so they did not require screening (by practice and in our written policy). Those remaining only took a few seconds to verify.

We also screened parties that were being allowed to "swap" on-us checks for cashier's checks.

Most of our banks were located in higher-risk geographic areas, so it wasn't worth the battle with regulators to make a case as to not performing the OFAC scan. Sometimes it is easier to just screen.

The banks that generated checks automatically were interfaced with our system and the payees were screened by the system in real-time. The teller had to review possible matches before completing the transaction. The BSA Dept reviewed a report the next day on suspect matches generated the prior business day.

Our bank had an examiner that suggested that OFAC checks for payees should be included in our risk assessment, and we set our threshold for amounts >= $1000 to have OFAC ran on them. In our case it hasn't significantly increased our teller's workload.

For those of you who are doing this now, how are you "clearing" suspected matches?

We're looking at doing this as well and the dealing with suspect matches for non-customers who aren't present is the one area that concerns me.

Thanks!

We scan OFAC in this situation, and we do it before the check is cut. If the teller gets a suspect hit, they contact the Risk Mgmt Dept for further instructions. But they are very few and far between.

Most of our suspect matches were easily resolved by simply comparing the suspect match name with the actual name. They were very rarely the same. I can only remember one time that we had a match that required us to obtain additional information on the payee. An exact name match should be escalated to a properly trained back office employee.

If an institution has a Low or Moderate OFAC risk, I have made the suggestion that OFAC be run on those checks that exceed the teller's limit and requires supervisor approval. In the time it takes to have a supervisor approve the check, you can run the name against OFAC.

I think the Vertex platform (Jack Henry) runs this screen automatically, doesn't it?