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#1696494 - 05/07/12 06:09 PM OFAC Items deposited by MSB?
Hilda Offline
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We have a MSB who has not registered with FinCen. He is currently cashing US Treasury Checks for hispanic oriented named persons outside our normal trade area. Should I be running an OFAC on these persons? The customer is depositing the checks he has cashed.

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#1696519 - 05/07/12 06:31 PM Re: OFAC Items deposited by MSB? Hilda
ComplianceGurl, CRCM Offline
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I'm not sure why you would run OFAC on your customers, customers? Are you basing this solely on ethnicity? Are these checks over $1000/person/day? If so, I believe that is the bigger problem if he is not a registered MSB.

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#1696526 - 05/07/12 06:38 PM Re: OFAC Items deposited by MSB? Hilda
BFrame Offline
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I'm not sure of a correct answer to this, but these are my thoughts:

We do not go through every deposit we take in & OFAC payees. We OFAC every non-customer that comes in to negotiate an item (regardless of the dollar amount of the item & regardless of where they are from). But we do not spend time going through deposits.

I don't think it's wrong to OFAC these payees, but will you do this everytime?

Does the customer know that he must register if he is conducting this activity? Perhaps request to see his AML policy, specifically regarding check-cashing.
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#1696549 - 05/07/12 06:56 PM Re: OFAC Items deposited by MSB? Hilda
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I would say that no you do not. It's technically your customer's responsibility.
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#1696554 - 05/07/12 07:06 PM Re: OFAC Items deposited by MSB? Hilda
ACBbank Offline
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OFAC scanning, regardless of the product, is a risk based decision. Your OFAC RA should dictate how you would handle this decision.

However, allowing an unregistered MSB (which requires an SAR to be filed) to engage in this type of activity is very dangerous business to engage in. I would hope you know this customer very well.
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#1696563 - 05/07/12 07:13 PM Re: OFAC Items deposited by MSB? Hilda
edAudit Offline
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28. How often do I need to scan my customer database for SDNs?

The frequency of running an OFAC scan must be guided by your internal bank policy and procedures. Keep in mind, however, that if your bank fails to identify and block a target account (of a terrorist, for example), there could be "real world" consequences such as a transfer of funds or other valuable property to an SDN, an enforcement action against your bank, and negative publicity. [09-10-02]


--------------------------------------------------------------------------------
http://www.treasury.gov/resource-center/faqs/sanctions/pages/answer.aspx
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#1696572 - 05/07/12 07:25 PM Re: OFAC Items deposited by MSB? Hilda
Lara Offline
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Deleted post!
Last edited by Lara; 05/07/12 09:09 PM.
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#1696575 - 05/07/12 07:28 PM Re: OFAC Items deposited by MSB? Hilda
Lara Offline
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Oh, forgot to mention not filing with FINcen to be a register MSB is another RED flag as well!!
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#1696578 - 05/07/12 07:36 PM Re: OFAC Items deposited by MSB? Hilda
Hilda Offline
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thank you for all your help and input.

We are filing SAR's for failure to register with FinCEN as a MSB, I feel with all our knowledge and documentation of what is going on through the account (and the bank knows the customer very well) we should OFAC on those checks. We have knowledge the customer is check cashing on persons unknown to us and out of our trade area and I feel examiners will want to know if we were proactive in checking the holders of the checks against OFAC.

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#1696586 - 05/07/12 07:44 PM Re: OFAC Items deposited by MSB? Hilda
edAudit Offline
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If you are checking you should have a plan on what you will do if you have a match and a false positive. You should also describe how you will determine if it is a match or a false positive.
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#1696595 - 05/07/12 08:01 PM Re: OFAC Items deposited by MSB? Lara
John Burnett Offline
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Originally Posted By: Lara
I would, here are few reason why-
* This was stated at a recent seminar I just attended that in time it maybe required to OFAC all payees on checks being cashed

I seriously doubt it. There's never been a federal regulatory requirement that a bank check any type of transaction against the OFAC list. There's just the important prohibition against transacting business with SDNs.

Originally Posted By: Lara
* We had a local business owner would come in(while he was here doing his business banking) he would cash a few of his employees checks for them, Always thought it was odd and watched it for awhile, well the business just got closed for having illegal aliens working for him.
Which has nothing at all to do with OFAC.
Originally Posted By: Lara
* Same seminar - many other banks and ours included talked of customers depositing other peoples U.S. tax returns into there accounts, some banks returned the money to the IRS others didnt because they process ACH by account number not by name, BUT ALL filed SARS!!!
Once again, this has nothing to do with OFAC.
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#1696602 - 05/07/12 08:13 PM Re: OFAC Items deposited by MSB? Hilda
Lara Offline
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Mississippi
I just stated why I would, comment was directed ONLY because she mention the treasury checks. An OFAC run here at our bank doesnt take but a second, so I see no reason why not to run an OFAC. Seriously doubt what---- that it was mentioned in the seminar or that it will be required. Thought this was to help people not ridicule them!!! SORRY
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#1696610 - 05/07/12 08:24 PM Re: OFAC Items deposited by MSB? Hilda
ACBbank Offline
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Lara - I don't think John was trying to ridicule you. He was just adding his opinion to the discussion. If your bank has the resources to OFAC check payees on every check that comes through, more power to you. That would never work at my bank. The sheer volume would prevent us from doing it.
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#1696612 - 05/07/12 08:31 PM Re: OFAC Items deposited by MSB? Lara
Doug Hendrickson Offline
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Lara,

Having always received very helpful information from John, I agree that it was not intended as ridicule. He was, correctly, separating out what is necessary under OFAC and what is not.

We don't OFAC the checks that any of our customers deposit as we don't usually have enough information about them to determine if a positive match would be valid or a 'false positive'. On the other hand, we check our customer database against OFAC nightly, because we do have enough information about them to determine if a positive match is a 'false positive'.
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#1696613 - 05/07/12 08:31 PM Re: OFAC Items deposited by MSB? Hilda
John Burnett Offline
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Well, I was admittedly a little brusque. My apologies. It was not meant personally, Lara.
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#1696655 - 05/07/12 11:15 PM Re: OFAC Items deposited by MSB? Hilda
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So, who believes here that the US Treasury department is issuing cehcks to someone on the OFAC list - raise of hands please???

I think this is probably a case of tax fraud - how are all these out of state Treasury checks getting to this MSB?

Personally, I would just shut him down. There are way too many red flags.
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#1696660 - 05/08/12 12:06 AM Re: OFAC Items deposited by MSB? rlcarey
Kathleen O. Blanchard Offline

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#1696702 - 05/08/12 12:15 PM Re: OFAC Items deposited by MSB? Hilda
DeeQ Offline
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I am sure it is a part of this scam/scheme:

http://www.wthr.com/video?clipId=7054149&autostart=true
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#1696747 - 05/08/12 01:05 PM Re: OFAC Items deposited by MSB? ComplianceGurl, CRCM
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Originally Posted By: ComplianceGurl
I'm not sure why you would run OFAC on your customers, customers? Are you basing this solely on ethnicity? Are these checks over $1000/person/day? If so, I believe that is the bigger problem if he is not a registered MSB.


Even bigger may be the bolded statement...
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#1696872 - 05/08/12 03:24 PM Re: OFAC Items deposited by MSB? Hilda
Bacon Boy Offline
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"We have a MSB who has not registered with FinCen."

This should raise concern with your bank, not the supposed ethnicity of the customers of your client. I find it completely off-base to gauge running OFAC on anyone because of this factor. Would you lock down your banking center because someone with a turban walked in to negotiate a check?
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#1697217 - 05/09/12 06:13 AM Re: OFAC Items deposited by MSB? Kathleen O. Blanchard
Princess Romeo Offline

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Originally Posted By: Kathleen B
Hand is up! whistle


Mine as well. If Treasury is issuing checks to persons on the OFAC list, then we really have some issues here since the Office of Foreign Asset Control IS part of the Treasury Department.

I agree with the other posters here. OFAC is the LEAST of your concerns. Your biggest issue is this sounds like a scam and you need to take quick action to investigate and possibly shut it down.

Read this recent advisory from FinCEN:

FinCEN Advisory on Tax Refund Fraud and Identity Theft
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#1697240 - 05/09/12 12:07 PM Re: OFAC Items deposited by MSB? Hilda
edAudit Offline
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Not that I am saying that anyone should OFAC everything or SSA but:

Despite EO 13224, SSA had not taken all of the necessary steps to ensure it was not making payments to individuals or organizations who committed, threatened to commit, or supported terrorism.


We searched OFAC's file and identified seven individuals with a Social Security number (SSN). We determined that SSA had not made payments to these individuals. However, five of these individuals had worked in the United States. In fact, one individual had been employed by a college in a large northern city as recently as 2003. The college terminated his employment following a news report linking him to terrorist groups. To prevent these individuals from receiving SSA payments or benefits, we believe the Agency should flag the earnings and/or Numident records of such individuals. In addition, we believe SSA should explore sharing earnings information on known terrorists with the Department of Homeland Security (DHS). Earnings information on known terrorists could potentially assist DHS in its mission.


http://oig.ssa.gov/sites/default/files/audit/full/html/A-08-05-15093.html
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#1697797 - 05/09/12 08:04 PM Re: OFAC Items deposited by MSB? edAudit
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Just curious, have you verified the addresses of the refund checks? I've seen several issues of addresses being the tax preparer instead of the individual.

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#1698149 - 05/10/12 03:56 PM Re: OFAC Items deposited by MSB? Hilda
rusure Offline
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Pet peeve-OFAC is NOT a verb.

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#1698225 - 05/10/12 04:52 PM Re: OFAC Items deposited by MSB? Hilda
John Burnett Offline
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No, it is not. But it is often used as an interjection.

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