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#2255040 - 06/09/21 12:04 PM IAT Via PP - Hong Kong?
praBSA Offline
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Joined: Aug 2018
Posts: 281
Can anyone help me interpret the sanctions on Hong Kong?

We have what appears to be a legitimate purchase via Paypal via a company in Hong Kong. The sanctions appear broad in nature. The transaction posted this morning. Is this Paypal's responsibility to block if it needs to be blocked? Can anyone help me determine what to do here?

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#2255044 - 06/09/21 01:00 PM Re: IAT Via PP - Hong Kong? praBSA
Jennifer Offline
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Jennifer
Joined: Dec 2014
Posts: 170
I spoke with OFAC regarding the same scenario - basically it is up the financial institution and what risk they want to take. The business could have entity owners that are on the SDN list. If the bank knows the funds are going to Hong Kong, it is the banks responsibility for OFAC as well. Our bank chooses a risk rejection in the cases where funds are going to a business in Hong Kong and the owners of that business are unknown.

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#2255048 - 06/09/21 02:08 PM Re: IAT Via PP - Hong Kong? praBSA
ColoradoAML Offline
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Joined: Mar 2018
Posts: 240
I agree that this is a risk tolerance question. My interpretation of section 4 of the sanction is that it's entirely list-based, and there are no broad geographic- or sector-based sanctions. If anyone disagrees with that assessment please let me know, because I suspect that most of us agree that interpreting and applying sanction programs in our institutions is difficult.

All list-based sanctions that I know of carry the same risk that a non-listed person that's majority owned by a listed person is also sanctioned. Our process is to seek understanding of the purpose of the transaction and determine if further questioning or investigation is necessary.

Regarding PayPal, they are subject to OFAC requirements just like any other US person, but if they blow it and process a prohibited transaction there's no specific safe harbor for you. We've rejected incoming PayPal IATs when we can't verify that the sender is not sanctioned.

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#2255049 - 06/09/21 02:44 PM Re: IAT Via PP - Hong Kong? praBSA
ACBbank Offline
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ACBbank
Joined: Jul 2006
Posts: 3,990
New York City
Hong Kong, to the best of my knowledge, is not a sanctioned jurisdiction. However, there may be individuals/entities that are sanctioned parties operating in Hong Kong. Unless you can successfully complete name screening on all parties I wouldn't process the transaction(s). Especially if it's for a non-critical customer.
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"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

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#2255050 - 06/09/21 02:56 PM Re: IAT Via PP - Hong Kong? praBSA
praBSA Offline
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Joined: Aug 2018
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ACB that makes me feel better. The customer has been purchasing health related products from India and Hong Kong. The debiting company's name is attached to the Paypal debit and is not included on any sanctions lists, but you're right, we don't know who is operating those company's over there. Paypal is frequently debiting IATs for transactions all around the world.

I just got here last August, they have always processed these transactions and put the onus on Paypal. It's a little risky, but I get it. We do OFAC them all at presentment and when they alert as well. Was just a little considered with Hong Kong specifically due to the new sanctions last year.

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#2255051 - 06/09/21 03:01 PM Re: IAT Via PP - Hong Kong? praBSA
ACBbank Offline
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ACBbank
Joined: Jul 2006
Posts: 3,990
New York City
Unless you're financial institution has a written agreement with PayPal you can't "put the onus on PayPal." That's not proper risk management.
_________________________
"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

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#2255057 - 06/09/21 04:26 PM Re: IAT Via PP - Hong Kong? praBSA
praBSA Offline
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Joined: Aug 2018
Posts: 281
I agree, which is why this question has arisen.

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#2255135 - 06/10/21 04:28 PM Re: IAT Via PP - Hong Kong? praBSA
Local_Banker Offline
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Joined: Jun 2019
Posts: 41
In the past I found Paypal's compliance group (compliance@paypal.com) helpful in clearing false positives that were common names matching to the SDN List. For example, you could provide the DOB of the SDN and ask if their customer had the same DOB, and if they said that the DOBs were different we would proceed. However, the last time I emailed them I never received a response.

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