Even though OFAC screening isn't specifically required there is a reason many, many banks screen beneficial owners against the SDN List.
Op here: That's my concern, right there. If OFAC screening isn't required, then we shouldn't be doing it. (To clarify: OFAC doesn't require any screening of any type; we're just required to figure out a way to avoid violating OFAC. But I want to know if having a non-customer BO on a FinCEN form would in fact violate OFAC.)
In other word, I'm trying to get to the heart of whether this bank would be hypothetically violating OFAC by having a beneficial owner who is on the OFAC list. I'm not looking for a best practice, or a strong argument in favor of or against checking BOs against OFAC, but want to know whether this would explicitly violate OFAC. Because if it doesn't, then we shouldn't be checking beneficial owners against OFAC, because there would be no action we could legally take if we found such a person to be on the OFAC list. For instance, if the bank can't legally block, reject, or freeze funds on the basis of who the BO is, then we should not be checking BOs against OFAC.
And I don't want to screen thousands of BOs per year until the day comes that it appears that we have an exact match, and then figure it out. I'd want to instead intentionally exclude non-customer BOs from OFAC screenings.