For the life of me, I cannot seem to locate anywhere in the reg as to WHO a bank is required to OFAC, i.e., Borrower, Guarantor, Grantor. Is this a bank policy as to who we choose to OFAC, or is there a requirement in the Reg that specifically states on who we are to run an OFAC?

You are prohibited from doing business with anyone on OFAC list. Who you actually check against OFAC is based on your RA.

Remember that there is NO requirement to check any name against the OFAC list. However, you cannot process any transactions for any entity on the list. Who you choose to check is based on your bank's risk assessment.

You should have done an OFAC Risk Assessment to determine what names you will scrub against the list, and how often.
From the Risk Assessment you would get your policy.

I believe that most banks are checking all customers, and all wire information; others are checking all vendors, payees of Cashier Checks etc as well.

How intense you are would depend on your location, volume and tolerance for risk.

Hope this helps you.

THANK YOU ALL SO MUCH! I knew there was a reason I wasn't finding specifics, I'm a digger!

Do we need to check non-customers? Eg. someone comes in and applies for a loan and we charge an application fee. Normally we check the OFAC list before we book the loan and the consumer becomes a customer. Are you checking BEFORE you accept the application fee? Just curious as to what others are doing in the loan department.

It is a technicality by the corner candy store can not sell gum to someone on the OFAC list.

Assuming that your OFAC RA concludes that you should be checking the names of your customers against the list, wouldn't you want to check the name of the loan applicant before you go through the process of underwriting the loan?

Our credit reports check them first, then we run them through OFAC the day they are signing the loan documents.

I have seen regulatory criticism when OFAC check was performed via credit report, and there is an extended period of time between the acceptance of the application fee and the loan closing. Their point was on vendor management: how does the bank test that the credit report agency maintains an up-to-date SDN list.

To be on a safe side, it is easier to maintain one OFAC check system for any SDN verification the bank relies upon, and to test it periodically, even if everyone understands that major credit bureaus are in fact updating their SDN lists. Saves a lot of argument at the exams.