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#1962602 - 09/17/14 06:07 PM OFAC scanning of vendors
BSA Analyst Offline
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In regards to OFAC scanning of vendors, do any other banks scan more than just the name and address for the vendor? Specifically, do other banks scan principals of the company as well?

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#1962615 - 09/17/14 06:32 PM Re: OFAC scanning of vendors BSA Analyst
ACBbank Online
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Why would you scan domestic vendors against the SDN List?
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#1962616 - 09/17/14 06:34 PM Re: OFAC scanning of vendors BSA Analyst
ACBbank Online
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Why would you scan domestic vendors against the SDN List?
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#1962620 - 09/17/14 06:43 PM Re: OFAC scanning of vendors BSA Analyst
Xian Ngyuen Offline
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Ummm, because there are listed entities (both persons and corporates) in 11 US states currently?

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#1962631 - 09/17/14 07:03 PM Re: OFAC scanning of vendors BSA Analyst
Xian Ngyuen Offline
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Ummm, because there are listed entities (both persons and corporates) in 11 US states currently?

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#1962635 - 09/17/14 07:14 PM Re: OFAC scanning of vendors BSA Analyst
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We don't do the principals of the company. Our regular vendors have been entered into our core system so they are always being scrubbed when there are changes, rather than every time the bank does business with them.

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#1962637 - 09/17/14 07:15 PM Re: OFAC scanning of vendors BSA Analyst
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We don't do the principals of the company. Our regular vendors have been entered into our core system so they are always being scrubbed when there are changes, rather than every time the bank does business with them.

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#1962678 - 09/17/14 08:12 PM Re: OFAC scanning of vendors Xian Ngyuen
ACBbank Online
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Originally Posted By: Xian Ngyuen
Ummm, because there are listed entities (both persons and corporates) in 11 US states currently?


Of this listed entities, how many are actually conducting business openly? A business that a bank would actually be involved with?
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#1962689 - 09/17/14 08:46 PM Re: OFAC scanning of vendors BSA Analyst
Xian Ngyuen Offline
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What constitutes better proof that your vendor is not listed by OFAC: screening them and finding no match, or simply expressing your strong belief that they couldn't possibly be a match?

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#1962703 - 09/17/14 09:07 PM Re: OFAC scanning of vendors Xian Ngyuen
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Originally Posted By: Xian Ngyuen
What constitutes better proof that your vendor is not listed by OFAC: screening them and finding no match, or simply expressing your strong belief that they couldn't possibly be a match?


OFAC is risk-based. If you actually have the time and manpower to screen everyone and everything, I'm quite jealous.

I drew a line in the sand with what I consider to be frivolous OFAC/sanctions screening. I initially got push back from audit on it, but they finally accepted it as long as the customer, BOs and in some cases, signers are screened.

Others may disagree, but I feel that resources are better spent than screening domestic vendors.
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#1962746 - 09/18/14 10:26 AM Re: OFAC scanning of vendors BSA Analyst
Elwood P. Dowd Offline
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I suggest you make your distinction based on the term of the day, "beneficial owners," not "principals" which has no defined meaning. FinCEN's current NRPRM implicitly acknowledges that there is no way to actually identify the beneficial owners of a U.S. entity other than asking the entity to self disclose them.

FinCEN's faith in the honesty of dishonest people notwithstanding, it seems unlikely that they would confess to you that Abril Cortez is a 50% shareholder even if he is.

In my opinion, OFAC searches are a fool's errand at best. Trying to eliminate every element of risk by searching every possible pulse point just makes things worse.
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#1963085 - 09/19/14 12:12 AM Re: OFAC scanning of vendors ACBbank
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Originally Posted By: ACBbank
Originally Posted By: Xian Ngyuen
What constitutes better proof that your vendor is not listed by OFAC: screening them and finding no match, or simply expressing your strong belief that they couldn't possibly be a match?


OFAC is risk-based. If you actually have the time and manpower to screen everyone and everything, I'm quite jealous.

I drew a line in the sand with what I consider to be frivolous OFAC/sanctions screening. I initially got push back from audit on it, but they finally accepted it as long as the customer, BOs and in some cases, signers are screened.

Others may disagree, but I feel that resources are better spent than screening domestic vendors.


Totally agree. I got into a similar argument with an examiner over the issue of non-customers cashing checks. His argument was "every bank I know scans every check." My argument was I'm willing to accept the risk that an SDN is not showing up in the US, using their real identity, for anything less than the $5,000 dollar threshold we have in place. That didn't convince him to drop it.
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#1963090 - 09/19/14 02:23 AM Re: OFAC scanning of vendors BSA Analyst
rlcarey Offline
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"every bank I know scans every check."

That tells me that he doesn't know very many banks. Scanning checks presented over the counter for cash probably represents about .0001% of all checks negotiated. If you are going to scan payees on checks, why not scan payees on the 99.9999% of the checks presented through in-clearings.

It just goes to show that many examiners have no real clue.......
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#1963099 - 09/19/14 09:59 AM Re: OFAC scanning of vendors rlcarey
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In an exit conference several years ago and an examiner was critiquing one of the bank's practices and pushing for a commitment for the bank to change it. The CEO had promised to review the issue, but would not commit to a change. The examiner would not let it go. Finally, the CEO blew up and said, "We acknowledge the risk. We think it is insignificant. Now, move on!"

It was a career long object lesson for me; First, I knew I was watching a real banker. Second, the examiner's criticism, the focal point of the exit conference, did not appear in the written report.

I wince internally every time a banker says, "The FDIC made us start running OFAC checks on over the counter items." When asked, "Was it in the written report? the answer is always, "No." Checking over the counter items, but not checking inclearings as rlcarey suggests is an example of a fool's errand. There is no logic to saying that all of the risk is in the low hanging fruit.

If anyone's bank actually was criticized in the written report for failing to check over the counter items, I would appreciate your sharing the exact wording.
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#1963113 - 09/19/14 01:00 PM Re: OFAC scanning of vendors Elwood P. Dowd
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Originally Posted By: Ken_Pegasus
In an exit conference several years ago and an examiner was critiquing one of the bank's practices and pushing for a commitment for the bank to change it. The CEO had promised to review the issue, but would not commit to a change. The examiner would not let it go. Finally, the CEO blew up and said, "We acknowledge the risk. We think it is insignificant. Now, move on!"

It was a career long object lesson for me; First, I knew I was watching a real banker. Second, the examiner's criticism, the focal point of the exit conference, did not appear in the written report.

I wince internally every time a banker says, "The FDIC made us start running OFAC checks on over the counter items." When asked, "Was it in the written report? the answer is always, "No." Checking over the counter items, but not checking inclearings as rlcarey suggests is an example of a fool's errand. There is no logic to saying that all of the risk is in the low hanging fruit.

If anyone's bank actually was criticized in the written report for failing to check over the counter items, I would appreciate your sharing the exact wording.


I'll give you a brief history of what happened at my institution, because it's quite ridiculous IMHO.

Our non-customer OFAC check threshold of $5,000 was mentioned in every Audit and Exam for several years, but never made a report. One year, a federal examiner made a written comment that we should use statistics to quantify the justification of our threshold (we all know what Twain would say about that). In response, I crafted some artful BS about how our $5k threshold was 2 standard deviations from the mean value of a non-customer cashed check, and as such, effectively targeted anomalous transactions. A year later, the state examiner came in and said, "oh...so you're only looking at 2 percent?" and made it a finding that we should review our thresholds again.

Since it was the second written comment on the topic, we caved and lowered it down at the same threshold we use for checking ID's (since it seemed appropriate to do it then anyhow).

But yes, the whole situation was absurd.
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#1963887 - 09/23/14 03:07 PM Re: OFAC scanning of vendors BSA Analyst
Beachbum, CRCM Offline
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2013 examination Conclusions and Comments

"The bank does not complete Office of Foreign Assets Control (OFAC) checks for noncustomers who cash checks on a customer's account at the bank. Management should conduct these searches to ensure OFAC compliance. Management should implement a process to complete OFAC checks on noncustomers within 90 days of this review."

It was the second written comment for us as well. we gave push-back the first time, but caved-in the second time.
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#1970275 - 10/17/14 05:40 PM Re: OFAC scanning of vendors Beachbum, CRCM
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Thank you. I'm both shocked and disappointed...if it's "risk based," then it's simply not their job to say you must do it. Your next step would have been to call the ombudsman or institute the somewhat cynical (as acknowledged) $5,000 threshold that patsfan mentioned.

The fact that so many examiners readily accept the dollar threshold for OFAC checks indicates they really don't understand what they are talking about.
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#1970348 - 10/17/14 07:47 PM Re: OFAC scanning of vendors BSA Analyst
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I'll chime in and say that the next set of examiners that show up - make them wait while you screen the name of their agency and the name of each individual examiner (and their spouse if you live in a Community Property state) against the current OFAC listing BEFORE they get a cup of coffee, plug in their laptops, use your printers, etc.

If they protest, point them to the finding in your last exam and let them know you can no longer make risk-based exceptions to your OFAC screening criteria.
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#1970372 - 10/17/14 08:25 PM Re: OFAC scanning of vendors Princess Romeo
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Originally Posted By: Princess Romeo
I'll chime in and say that the next set of examiners that show up - make them wait while you screen the name of their agency and the name of each individual examiner (and their spouse if you live in a Community Property state) against the current OFAC listing BEFORE they get a cup of coffee, plug in their laptops, use your printers, etc.

If they protest, point them to the finding in your last exam and let them know you can no longer make risk-based exceptions to your OFAC screening criteria.


You would not need to OFAC the Spouse but; who is the maker of the laptop they plan on writing the report on and what is the brand of pen they plan on signing it with. laugh
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#1970414 - 10/17/14 10:57 PM Re: OFAC scanning of vendors BSA Analyst
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No - in a Community Property state, any item "owned" by one spouse becomes the property of the other spouse - so...., before the examiner downs that cup of coffee or pastry in the break room....., just sayin'.

But yeah - if you REALLY want to take OFAC to the Nth degree, you could hold up an examiner all day while you check EVERYTHING about everything they have or want to do against OFAC. It would be an interesting exercise in showing examiners WHY an OFAC program HAS TO BE risk-based.
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