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#2252387 - 04/15/21 12:19 PM IAT Via PP
praBSA Offline
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The bank chooses to only be an ODFI for a select few business customers and those transactions are reviewed from an OFAC perspective daily.

I am in the process of the bank's first ever alert threshold review. IAT's are a source of one of largest generating alerts. These are ALL originated through Paypal, most likely via Amazon/Ebay. Correct me if I am wrong here, the ODFI here is Paypal/Paypal's bank, and not our bank. Reviewing these alerts is entirely fruitless. We have never generated a case off of these alerts and the a large number of the names are of Asian decent with 6-10 various surnames which are impossible to match/clear even if we tried. They are also usually less than $100. I believe I can justify removing this alert all together over time, but want to start by at least upping the dollar threshhold.

Can someone just confirm for me that, as the RDFI, from a BSA perspective, these alerts are generally useless? I guess it's possible Paypal would generate an IAT to a sanctioned individual or country, but we would never have access to that information to be able to clear an alert, all we have is Paypal and a Name. How do you guys handle this?

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#2252388 - 04/15/21 12:28 PM Re: IAT Via PP praBSA
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,548
Galveston, TX
You need to clear any IAT OFAC suspects before you post them.

https://www.nacha.org/system/files/...iary-Account-Prior-to-OFAC-Screening.pdf
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2252393 - 04/15/21 12:51 PM Re: IAT Via PP praBSA
praBSA Offline
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I must have been a little unclear in my wording. These are posting as debits to our customer's accounts, out via PayPal, never credits. We have a separate report generating outside of our alert based system within our core that screens all incoming and outgoing IAT transactions for OFAC which we review daily, but we are not an ODFI for any retail customers.

I guess to simplify my question/statement. I guess I fail to see the general purpose of this IAT alert scenario of a $5.99 IAT transaction debit via Paypal. As a general statement it would be on Paypal to block these transactions as the originator? This alert scenario has never generated a case, I can't find a reason to even keep this scenario.

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#2252400 - 04/15/21 01:50 PM Re: IAT Via PP praBSA
Jennifer Offline
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Jennifer
Joined: Dec 2014
Posts: 170
Our bank has access to where Paypal is sending those funds. If the bank knows the funds are going to a person/country etc. that are sanctioned, our bank follows the regulation to block or in some cases, our bank does a rejection based on risk (Hong Kong for example).

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#2252409 - 04/15/21 03:44 PM Re: IAT Via PP praBSA
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,548
Galveston, TX
Using or modifying alerts really is a business decision. But if you turn off alerts for IATs under $100 and some customer starts dealing in many multiples of under $100 IATs, are you saying you don't want to take a look at the account?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2252428 - 04/15/21 05:22 PM Re: IAT Via PP praBSA
praBSA Offline
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Joined: Aug 2018
Posts: 281
Right. I was considering changing the dollar threshold here and possibly adding a frequency based alert as well to mitigate that risk. 10 years of this alert being active and not 1 case even generated is a good argument to do so, especially when we were told under exam to narrow our alert thresholds across the board. First time since implementation 11 years ago that anyone is reviewing alert parameters. Beyond overdue.

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#2252442 - 04/15/21 08:57 PM Re: IAT Via PP praBSA
ColoradoAML Offline
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Joined: Mar 2018
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We generate alerts on these and we have a templated clearing for transactions that are under a certain dollar amount and are self-evident as non-suspicious, such as PayPal. We don't want to ignore these entirely, but I agree they are very low risk and should not take your time away from more productive alerts. I think that your ten years of data are a compelling piece of evidence to refer to in whatever document you write to record your process updates, and we've presented similar data to our examiners after we've made similar changes.

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