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#2095288 - 08/25/16 04:39 PM International ACH (IAT) & OFAC
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Our institution receives very few IAT's. The IAT's are reviewed and an OFAC scan completed after the transaction has posted to the customers account. The OFAC vendor that we use showed a very strong match based on an aka name . I was made aware of this the day after the transaction posted. My concern is that we allowed the debit to pay out of the customers account, and the vendor recommendation is that we file an OFAC report for blocked funds, but the funds were not blocked,so how should I do this. My initial thought was to debit the customers account again and place into a blocked account. I don't mind explaining to the customer why the funds were blocked, but don't want to justify why his account was debited a second time. Also, in hopes that this was only a strong match and not an exact match, I went to the treasury website and used their OFAC search engine using the information provided from the IAT report, then using minimal information and all search results showed that there were no matches. This is the first strong match our institution has received using our OFAC vendor and from that I have learned where we need to improve our operating procedures, but would appreciate some recommendations on how to handle this particular situation.

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#2095327 - 08/25/16 06:33 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
BrianC Offline
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I agree there are no funds to block. If today is the first business day after the transaction posted, you are still within your rights to return the debit. Call the OFAC hotline to confirm whether or not you have a true match. If you do, they will provide direction whether to credit the customer's account after you return the debit or to block the funds.
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#2095337 - 08/25/16 07:01 PM Re: International ACH (IAT) & OFAC BrianC
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Thank you Brian, but I did not receive the notification until it was too late to stop the transaction. What is your take on the treasury search engine not showing any matches compared to our vendor showing a strong match to an aka name. The match was to the aka name with a light variation in the name spelling.

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#2095344 - 08/25/16 07:16 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
edAudit Online
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You are here
the OFAC sanctions search engine is default set to a 100 match I would change it to a lower setting. Then name could also be a weak aka (name inside of the "XXX" on the treasury list).
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#2095346 - 08/25/16 07:23 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
HappyGilmore Offline
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Pulling people out of the ditc...
if it is a true OFAC hit, you don't have the option of returning the item or blocking the funds or giving the customer access to the funds...you must place the funds into an interest bearing account and notify ofac...anything else puts your bank at risk.

a "strong" match does not mean it meets the OFAC list, so you should have a review done prior to posting to customer to determine if a true OFAC hit or not, and address it then. if you wait until after it has posted, you run the risk of violating ofac.
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#2095350 - 08/25/16 07:32 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
BrianC Offline
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Quote:
if it is a true OFAC hit, you don't have the option of returning the item or blocking the funds or giving the customer access to the funds


Happy, since this is a debit to the RDFI's account, returning the debit entry would prevent the Originator who is on the SDN list from receiving credit for the funds so returning the debit entry would be appropriate. Whether the bank's customer receives the proceeds from the returned debit entry back in their account or they are placed in an interest bearing account would depend on whether OFAC instructed the bank to block or reject.

As other's have alluded, your process should be to compare IATs to the OFAC list prior to posting.
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#2095367 - 08/25/16 08:32 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
HappyGilmore Offline
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Pulling people out of the ditc...
sorry Brian - I read it as deposit to account and customer withdrew - that being the debit they want to block. it would appear they are beyond the proper window for returning. and I'm curious what code you would suggest they use that would not have the item rejected back to them as untimely.
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#2095377 - 08/25/16 08:50 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
BrianC Offline
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I was hoping that since the OP stated, "I was made aware of this the day after the transaction posted." that the transaction posted yesterday and we were still within the window to return. Since that ship has sailed, there is no return code we can use that the ODFI cannot reject.

At this point I am with you on the fingers crossed that a high percentage match of a strong aka does not automatically translate to a positive match. At this point the best option is to call the OFAC Helpline, try to determine if we have a false positive and cry "mea culpa" if we don't.

OFAC generally shows much greater mercy when violations are self-identified.
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#2095426 - 08/26/16 12:59 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
rlcarey Offline
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Galveston, TX
Has anyone contacted the customer yet to get more information as to whom they actually authorized to debit their account??
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#2095715 - 08/29/16 02:53 PM Re: International ACH (IAT) & OFAC rlcarey
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Attempts to contact the customer were unsuccessful. The end result, I contacted the Treasury Dept. Their suggestion was to do a voluntary self disclosure. The procedures for IAT's and OFAC are in the process of being updated. Amazing how you think you have everything covered, then, wham!!! Thanks to all for your input. I found the Treasury Department Rep. to be very helpful.

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#2095724 - 08/29/16 03:11 PM Re: International ACH (IAT) & OFAC Banker Seeking Answers
rlcarey Offline
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Just goes to show that you shouldn't ever post an IAT prior to a thorough scanning.
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