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#356076 - 05/05/05 07:47 PM Timing of OFAC verification
AMXSteve Offline
Member
Joined: Jun 2001
Posts: 75
Wilmington, OH, USA
This may have been asked before, but I couldn't find it.

At what point should we be screening new customers against OFAC? Should we screen them before we open the account, or is acceptable to screen them in a batch each night. One of the factors specific to our bank is our teller system. It is online, real time so, depending on what the customer deposited, he/she could begin performing withdrawal transactions immediately.
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#356077 - 05/05/05 08:26 PM Re: Timing of OFAC verification
HappyGilmore Offline
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Posts: 19,580
Pulling people out of the ditc...
you should scan prior to making any withdrawls from the account.
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#356078 - 05/05/05 10:02 PM Re: Timing of OFAC verification
Anonymous
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In the other CIP thread Ken Pegesas said there is no official list yet so what is the list that you use? Is it the list of the special blocked nationals?

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#356079 - 05/05/05 10:05 PM Re: Timing of OFAC verification
Elwood P. Dowd Offline
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Next to Harvey
The OFAC (SDN) list is available. It is the "list of known or suspected terrorists" mentioned in the CIP regulations that has never been published.
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#356080 - 05/06/05 01:35 PM Re: Timing of OFAC verification
Anonymous
Unregistered

I am original anon from other CIP question and this is now to confusing for me. In post 358137 you said OFAC is risk based and thatwe don't have to do anything specific. You said the check itself is not connected to CIP. In post 358137 you said the CIP regs do not require banks to check the OFAC list and you said no list of suspected terrorists is published. I am now totaly confuse because why even bother if we don't have to.

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#356081 - 05/06/05 02:00 PM Re: Timing of OFAC verification
Anonymous
Unregistered

Quote:

I am original anon from other CIP question and this is now to confusing for me. In post 358137 you said OFAC is risk based and thatwe don't have to do anything specific. You said the check itself is not connected to CIP. In post 358137 you said the CIP regs do not require banks to check the OFAC list and you said no list of suspected terrorists is published. I am now totaly confuse because why even bother if we don't have to.




Where to begin, where to begin???

Re: OFAC scanning is risk-based, not required in black-letter law...
Well, my mother used to have a way of saying "I'm not telling you what to do, you do what you want." that in fact meant "You know very well what you ought to do." Same here.

In another post John Burnett basically asked "If you're not planning to do scans of the OFAC list, what's your strategy for making sure you're not doing business with people the government says you can't do business with?"

If I had it handy, I'd print my list of the fines, jail terms and laws you can be charged under for doing business with someone on Treasury's list. Off the top of my head, the fines are $10K - $100K per offense, the jail time runs up to 10 years, and the flashier laws (ones I certainly don't want to see in a newspaper next to my bank or CEO's picture) have phrases like "Trading with the Enemy", "Foreign Narcotics Kingpin" and stuff like that.

But I'm not telling you what you have to do. You do what you want. Go ahead, open that business account for Daytona Pools in Richardson, TX. Write them a line of credit of $250,000, and wire some payments to their suppliers. You do what you think best....

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#356082 - 05/06/05 03:29 PM Re: Timing of OFAC verification
Anonymous
Unregistered

Quote:

Quote:

I am original anon from other CIP question and this is now to confusing for me. In post 358137 you said OFAC is risk based and thatwe don't have to do anything specific. You said the check itself is not connected to CIP. In post 358137 you said the CIP regs do not require banks to check the OFAC list and you said no list of suspected terrorists is published. I am now totaly confuse because why even bother if we don't have to.




Where to begin, where to begin???

Re: OFAC scanning is risk-based, not required in black-letter law...
Well, my mother used to have a way of saying "I'm not telling you what to do, you do what you want." that in fact meant "You know very well what you ought to do." Same here.

In another post John Burnett basically asked "If you're not planning to do scans of the OFAC list, what's your strategy for making sure you're not doing business with people the government says you can't do business with?"

If I had it handy, I'd print my list of the fines, jail terms and laws you can be charged under for doing business with someone on Treasury's list. Off the top of my head, the fines are $10K - $100K per offense, the jail time runs up to 10 years, and the flashier laws (ones I certainly don't want to see in a newspaper next to my bank or CEO's picture) have phrases like "Trading with the Enemy", "Foreign Narcotics Kingpin" and stuff like that.

But I'm not telling you what you have to do. You do what you want. Go ahead, open that business account for Daytona Pools in Richardson, TX. Write them a line of credit of $250,000, and wire some payments to their suppliers. You do what you think best....




This is not an answer. We either must or we must not but which is it. Where is the rule saying it. One person says CIP regs do not require checks cause there is no list yet and that no requirements for specific checks. Just saying a fine might happen does'nt say anything cause the procedure is risk based not mandatory.

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#356083 - 05/06/05 03:53 PM Re: Timing of OFAC verification
Anonymous
Unregistered

I'm beginning to think you're being intentionally difficult. Nonetheless, the Executive Order prohibits any US company, or company operating in the US from doing business with, providing or facilitating financial services to any party on that list.

How you accomplish that is up to you. But your regulators do get to express an opinion on the effectiveness of your approach.

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#356084 - 05/06/05 03:57 PM Re: Timing of OFAC verification
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,281
And you are mixing issues. CIP and OfAC are two separate issues. The Section 326 (CIP) list is totally separate from OFAC.

If your bank is not familiar with OFAC or has determined it is not necessary to scan any customers against the OFAC list, best of luck. Even non-banks have been fined for doing business with individuals or businesses on the OFAC lists. If your bank is willing to risk a large fine and an unsatisfactory examination result, that is your decision.
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#356085 - 05/06/05 04:14 PM Re: Timing of OFAC verification
Anonymous
Unregistered

Quote:

I'm beginning to think you're being intentionally difficult. Nonetheless, the Executive Order prohibits any US company, or company operating in the US from doing business with, providing or facilitating financial services to any party on that list.





I still dont know what list you mean. When you say list and exec order is this the official OFAC terrorist list of the foreign nationals to be blocked shown on OFAC web? What order and other list are you meaning here? Please just say whether the OFAC is mandatory and provide the supporting reg. The link to previous post from other thread said its not mandatory yet. I just want clarification.

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#356086 - 05/06/05 05:00 PM Re: Timing of OFAC verification
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,281
Here is the link to Department of Treasury's OFAC site. It contains the list of blocked persons/companies and information on all of the sanctioned countries as well as explanatory information. Your bank needs to become very well informed on this. It is federal law that you cannot do business with any blocked person or business and cannot engage in sanctioned transactions.

OFAC site

If you choose to not make sure you are not doing business with any of these blocked entities/individuals, that is your bank's call.
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#356087 - 05/06/05 06:48 PM Re: Timing of OFAC verification
John Burnett Online
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John Burnett
Joined: Oct 2000
Posts: 39,794
Cape Cod
Let's try this approach --

There are two sets of rules. The first is the set from OFAC which oversimplify down to "Don't do business with any of the folks on our SDN list," and also include some prohibitions based on geography, governments, etc. OFAC does not have any rule that says you must check every person with whom you do business (or with whom your customers do business) against the OFAC list. Nor is there any regulation by any other agency that says that.

What the federal banking regulators have is a concern about safety and soundness of financial institutions. They insist that every financial institution have in place a policy and procedures dealing with OFAC. They don't dictate the content of those policies. They just want to see that the financial institution is aware of the risks of doing business with these bad guys, and has established reasonable procedures for preventing that from happening. If the bank has a weak policy or procedures in this area, the regulator may use its powers of persuasion (such as a down-tick in its rating of the bank's management) to have the procedures beefed up.

For what it's worth, there have been scores of posts on Bankers Threads about checking this, that, or another person (payees on cashier's checks, new account customers, loan applicants, wire transfer parties, ACH Originators and Receivers, vendors, etc.). The best advice of which I am aware is to have in place a risk-based policy and procedures designed to manage the risk of inadvertently releasing funds to someone on the OFAC lists. No one would ever seriously suggest you ignore the need to check altogether.

Section 103.121 of the Treasury's "Bank Secrecy Act" regulations is the section implementing section 326 of the USA PATRIOT Act, and is commonly referred to as the CIP (Customer ID Policy) section. One of the requirements of section 103.121 , specifically in paragraph 103.121(b)(4), is that the bank's CIP Policy provide for a check of the customer's name against a government list designated by the Treasury in conjunction with the Federal functional regulators. That list would be one that includes known or suspected terrorists or terrorist organizations.

That list has not yet been designated. People often read the requirement to say that you must check the OFAC SDN list, because the OFAC SDN list includes a lot of known or suspected terrorists and terrorist organizations. But the OFAC list is not designated as a government list to be checked in connection with 103.121(b)(4). No list is.
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