Security Guy:
If you've been a BOL member for awhile and subscribe to the daily Banker Briefings, you know that sometimes the OFAC list has been updated often -- sometimes twice in the same day. A couple of more things to take into consideration, besides the OFAC list, before you open any account or fund a loan for an existing account holder:
1. If you also use ChexSystems (or any other validation service), remember that this excellent service is user-dependent -- it requires that users actually report customers and activities. If an institution feels that an event is too embarrassing to report, it won't -- and you won't be advised of a potential customer land mine.
2. There are three (3) types of businesses that are historically responsible for disproportionate losses from several sources, including kiting, other NSF checks, forgery, embezzlement, invoice fraud, loan fraud and bankruptcy fraud ("bustout schemes"). These businesses are generally sole proprietorships or partnerships and include:
- General contractors (e.g., construction, plumbing and electrical);
- Eating establishments (e.g., restaurants, drive-ins and takeouts); and
- Drinking establishments (e.g., saloons, bars and lounges).
Take a spin through your local newspaper's bankruptcy filings -- and you'll likely find these businesses make up about 50% of the filings.