I think there is a level of misinterpretation here in what the examiners are ostensibly directing institutions to do. Consider for a moment that the OFAC listing of Specially Designated Nationals and other wanted bad guys is now well over 110 pages -- with each page containing 3 columns of names, addresses, cities, countries, etc. Realistically, it just isn't possible to physically print this document daily, review each page and compare it for changes against the previous day's listing, then take action on any new or deleted names.
Believe me, I'm not one who waves the flag for the examiners, but in this case I have to agree that what the examiners are believing is that no institution -- big bank or small bank -- can realistically manage the OFAC/PATRIOT process by using 100+ pages in a 3-ring binder. Can you imagine new depositors coming in to your branches and you have to consult a 3-ring binder, printed daily, to see if a name is on the listing. It's way too cumbersome and overwhelming.
If I'm understanding correctly what most bankers are being encouraged to do by the examiners it is to explore a more feasible and friendly way to conduct the name-match search instead of doing it with huge manual print-outs and 3-ring binders. There are so many inexpensive web-enabled products now -- i.e., Equifax has one; Bridger Systems; Experian has one; the ABA endorses one; Trans Union has one; ALLTEL has one, Chexsystems etc., etc. -- that actually perform the OFAC search that it's just not feasible to perform this task otherwise. Besides, any examiner would suspect that if it is done manually then days will be missed when the print-out doesn't get printed, pages get lost, people are out sick or on vacation, and the chance that terrorist financing could occur in an institution with this antiquated process is much higher than in institutions that have a more systematic, professional process. "Automation" doesn't mean you're buying servers and software; it just means you're using a vendor's product to make the job easier.