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#2010924 - 04/29/15 02:18 PM OFAC on foreign checks- bank its drawn on
basilring Offline
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The area of the bank that is in charge of OFAC (in short - I'm in a branch support compliance position) has recommended that when we have a foreign check for deposit we run an OFAC inquiry on the bank it is drawn on. We currently run on the maker. They acknowledge it is not a requirement, but a good idea.

Anyone else have this in their procedures? Arguments for and against?
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#2010928 - 04/29/15 02:26 PM Re: OFAC on foreign checks- bank its drawn on basilring
PrimeTime Offline
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Arguments for would certainly include that if it were ever to become a requirement, you would be ahead of the curve which is never a bad place to be. Examiners may recognize it as an additional set in the EDD process, and being over-cautious would probably be better regarded than being under-cautious when it comes to OFAC.

Arguments against would stem from the amount of time it would take to perform this action, which would be contingent on the number of foreign checks you take in per day/month, and the number of individuals that would be responsible for this. If you take in a large volume and it's going to consume a lot of time (although I don't see how), you'll get some kickback on that for sure.

We do not have it in our procedures to run it at the time of deposit but I'm sure our automated OFAC monitoring software would catch it after the fact if anything were to ever come up.
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#2011030 - 04/29/15 06:11 PM Re: OFAC on foreign checks- bank its drawn on basilring
basilring Offline
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Thank you PrimeTime. I am looking into our volume right now to see what kind of impact it may have... of course, my branch folks want to argue against doing it!
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#2011108 - 04/29/15 08:03 PM Re: OFAC on foreign checks- bank its drawn on basilring
HappyGilmore Offline
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Pulling people out of the ditc...
we seem to go over this frequently on BOL...there is no requirement to run anything against the ofac list, the issue is you can't conduct business with anyone on the list. so you set a risk ratio for what your bank determines to review and scan. are there banks on the ofac list? most certainly there are. should you scan them all? I'd suggest that as most banks on the ofac list are from a the middle east or Burma, if you have a check drawn on bank of Scotland you're probably okay not to run it. but your bank needs to set a process to determine how/when you will do such.
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#2011162 - 04/29/15 11:48 PM Re: OFAC on foreign checks- bank its drawn on basilring
Princess Romeo Offline

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Thank you Happy!

I swear if I see one more OFAC scan on Wells Fargo or Bank of America, or First American Title, or the Boys Scouts of America Local Troup #5345, I..., I...., I'm going to hurt something.
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#2011169 - 04/30/15 03:49 AM Re: OFAC on foreign checks- bank its drawn on basilring
Elwood P. Dowd Offline
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Quote:
when we have a foreign check for deposit...


"Foreign check" generally just means a check that is not drawn "on-us."

Does your bank actually accept checks drawn on banks outside the U.S. for deposit?
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#2011183 - 04/30/15 12:49 PM Re: OFAC on foreign checks- bank its drawn on Princess Romeo
HappyGilmore Offline
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Pulling people out of the ditc...
Originally Posted By Princess Romeo
Thank you Happy!

I swear if I see one more OFAC scan on Wells Fargo or Bank of America, or First American Title, or the Boys Scouts of America Local Troup #5345, I..., I...., I'm going to hurt something.


does your system not allow you to build an exclusion list?
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#2011390 - 04/30/15 06:55 PM Re: OFAC on foreign checks- bank its drawn on basilring
Princess Romeo Offline

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Actually a holdover from my days of doing audits and reviews at client institutions. Loan files would have pages,and pages and pages of OFAC print-outs showing all parties upon which an OFAC search was performed - and yes, Bank of America, Wells Fargo, First American Title Company, and in one case, a local Boy Scout Troop.

An exclusion list would not really be the point since, hopefully, Boy Scout Troop #5345 wouldn't hit on OFAC, but I am talking about OFAC systems where each party to a transaction is manually entered, and the result of the search is printed and placed in the file. IMHO - a total waste of time and resource, but apparently made another auditor or an examiner happy.
Last edited by Princess Romeo; 04/30/15 06:57 PM.
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#2011394 - 04/30/15 07:04 PM Re: OFAC on foreign checks- bank its drawn on basilring
basilring Offline
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Ken... it is an international check
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#2011425 - 04/30/15 08:21 PM Re: OFAC on foreign checks- bank its drawn on basilring
Elwood P. Dowd Offline
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If you cash a check for a payee who is on the OFAC list, OFAC has opined that you have done business with the person and you're in trouble.

OFAC does say some ridiculous, somewhat fanatical, things, but they haven't s t r e t c h e d to the level of saying that if your customer deposits a check drawn by or drawn on a person who is on the OFAC list that you have done business with that person. I've never even heard anyone suggest that.

Neither the drawer nor the drawee of the deposited check derives any benefit from the transaction. Moreover, you would have to let the check clear before you would have any funds to block. (The SDN/drawer would simply love it if you seized the check when it was tendered for deposit. wink )

My comment comes with a disclosure that I think checking checks cashed over the counter is a ridiculous exercise in futility. I would consider this a couple steps worse...
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#2011453 - 04/30/15 09:16 PM Re: OFAC on foreign checks- bank its drawn on basilring
Compl101TX Offline
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Ken,

Is scanning for the originating bank and originator of incoming wires different than the check in this discussion?
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#2011499 - 05/01/15 12:44 PM Re: OFAC on foreign checks- bank its drawn on Compl101TX
Elwood P. Dowd Offline
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Very good! I would say the primary difference is that, with an incoming wire, you have the money; i.e. you can block the transaction. With a check, you do not. All you have is a piece of paper and the drawer would love it if he paid a bill with a check, but it was never presented for payment because the depositary bank grabbed it.

P.S. I chuckled thinking of how any bank would explain to a local judge why it grabbed a check and refused to send it through the clearing system because it thought it might be an OFAC violation. The hearing would be short...
Last edited by Ken_Pegasus; 05/01/15 03:14 PM. Reason: Add P.S.
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#2011678 - 05/01/15 07:48 PM Re: OFAC on foreign checks- bank its drawn on basilring
kw004h Offline
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Can someone with operational insight help me understand how this transaction would be processed?

What I mean is, if Joe Smith, our account holder, wants to present a Check drawn on the Bank of Lebanon, what's the process for getting those funds from Bank of Lebanon to our bank? Would someone in a back office contact the Bank of Lebanon and request a wire transfer to cover the amount of the check? An ACH?

At some point, wouldn't there have to be a transaction between our bank and the bank from which the check is drawn? If so, wouldn't that fit the definition of "doing business with" if the Bank happened to be on an OFAC list? Thanks for any clarification!

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#2011856 - 05/04/15 04:51 PM Re: OFAC on foreign checks- bank its drawn on basilring
devsfan Offline
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If you have a check drawn on a bank outside of the US it must be sent to that bank for collection and you would not credit the account of the depositor until you receive payment from that bank. They would probably instruct their US correspondent bank to debit their account and then wire the funds to your bank. This wire should go through OFAC filtering, but if they have an account with a bank in the US the chance of the bank being on the OFAC list is slim to none. I hope this has answered your question.

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#2013057 - 05/08/15 06:24 PM Re: OFAC on foreign checks- bank its drawn on basilring
kw004h Offline
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Yes - thanks, devsfan.

It seems then, you've just made a case that, in the unlikely event a check is presented drawn on a bank subject to sanctions, there would be a direct transaction between the sanctioned bank and the US bank.

I guess I'm still wondering what people's opinions are about whether this activity would be considerd "doing business with" that Bank. Ken's example above makes perfect logical sense, of course, in that blocking or rejecting the payment doesn't really hurt the Bank in this case. However, as the initial check transactions is not complete until the wire transaction is completed, wouldn't it make sense that this transaction would need to be blocked or rejected?

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