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.