Our International Department came to me this morning questioning the process by which foreign checks, drawn on foreign banks are OFAC screened. What I’ve gathered so far today, is that there are two channels by which we receive foreign checks (a) the Teller Line – Retail and (b) Lockbox. Currently, there is no screening (i.e. entity/individual paying, memo line, bank drawn off of) occurring in either channel. The funds are immediately available to the customer. They also indicated that they’d spoken to several peer banks who are screening on the teller line prior to making funds available.
OFAC isn't my strongest suit; however, in this situation, I think we need to implement either (a) a hold process whereby funds are not available until the OFAC screening is complete (potential customer impact due to turn around time by Item Processing) or (b) an OFAC screen on the teller line, and implement a process whereby funds are not immediately available if there is a potential match, until we’ve determined if the potential match has any merit. Could we add this to our funds availability policy/disclosure – “Foreign checks drawn on foreign bank accounts may require 3-5 days for processing" or something to that effect? Is this allowed given that Reg CC doesn’t apply to foreign banks?
Anyone have thoughts?
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CRCM/Senior Compliance Analyst, VP