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#2235935 - 04/29/20 05:34 PM Who checks OFAC on credit and debit card trans?
Anonymous
Unregistered

During my time in compliance I've never heard of a small bank having a process to check OFAC on debit or credit card trans. However, surely someone, somewhere, is doing that, right? Does Visa or Mastercard check it for us? Is there some third party system somewhere in the middle, doing it? I know entire countries might be blocked (I suppose by Visa or MC) when required (e.g., Cuba), but I'm referring to, for example, when a transaction includes a business name/entity name or individual name, and that person or entity is an exact match with someone on the OFAC list.

We also never get asked to approve or clear any close matches.

The two people in this small bank who you are going to say should be able to answer this question, don't know.

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#2235941 - 04/29/20 06:46 PM Re: Who checks OFAC on credit and debit card trans? Anonymous
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,428
Illinois
Everything OFAC is risk-based. Remember that OFAC does not mandate when/how searches are performed. It only imposes penalties for processing a prohibited transaction.

In order to become an acquiring merchant, a financial institution has to agree to provide processing services to the merchant. As an issuing institution, you would have no way of preventing an authorization to a sanctioned entity unless you entered every name on the list into an authentication/fraud blocking program your processor provides. I know of no issuing bank doing anything like this. Similarly, I know of no bank that is reviewing the payee of every inclearing check that its customers write.
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#2235944 - 04/29/20 06:59 PM Re: Who checks OFAC on credit and debit card trans? Anonymous
TomS Offline
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Joined: Jan 2004
Posts: 315
USA
I previously worked with an AML monitoring system that automatically checked OFAC on debit card transactions. Prior to using that system we did not do OFAC checks on debit card transactions.
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#2235947 - 04/29/20 07:16 PM Re: Who checks OFAC on credit and debit card trans? Anonymous
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,428
Illinois
I'm sure it can be done. I guess my question is, "What would we be able to do if we had a match?"

For example - I initiate a debit card purchase from a Venezuelan business that is sanctioned. You identify the transaction when it posts to my account. You can't reject the transaction because the money is already gone. There's no VISA/MC chargeback reason for "OFAC match."
IMHO, the greater OFAC responsibility here rests with the financial institution that is providing acquiring processing services to the merchant to perform OFAC searches on its customers. This is also why VISA/MC operating rules require their financial institutions to certify that they have BSA/AML/OFAC programs when they become principal or sponsored members.
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