regulations state account opening
No they don't. There is no OFAC regulation government frequency or timing of searches. OFAC only prescribes penalties if your process a prohibited transaction. FinCEN's 2016 FAQs note that you can treat beneficial ownership information for screening the same way you do customer screening.
Question 23: Office of Foreign Assets Control (OFAC) Regulations
Q: Are covered financial institutions required to comply with the OFAC regulations with respect to beneficial ownership information?
A: Covered financial institutions should use beneficial ownership information as they use other information they gather regarding customers (e.g., through compliance with the CIP requirements), including for compliance with OFAC-administered sanctions.
Also see OFAC FAQs
noting that OFAC only applies if the beneficial owner has 50% or more ownership interest. There is nothing here about who must be screened and when.
Your auditor is advocating busy work to check a box on a workpaper and you are right to question.
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