This may be obvious to the ACH experts but I am not a member of that league - - - yet.

The question has come up whether we need to check an ODFI or RDFI (as opposed to the actual originator or receiver) against the OFAC lists. Aren't all ODFI and RDFI institutions US banks (and presumably already checked by the Fed) so there would be no need to OFAC-check the ODFI & RDFIs?

Thanks!

I'm sorry, I'm not part of the elite group yet....what does ODFI and RDFI stand for?

Here's the extent of my ACH knowledge (hopefully that's not entirely true!): ODFI - originating depository financial institution. RDFI - receiving depository financial institution.

You do not have to check an ODFI or RDFI against the OFAC list. Part of the requirement of the NACHA ACH rules of being either is that the financial institution agrees to ensure its own compliance with OFAC.

Thanks, cwilliams, for all your ACH answers - I've learned a lot from you! Thanks for sharing your knowledge.

Thank you! The world of banking has so many initials! From what I have learned concerning OFAC would not allow for any banking entity to be in exsistance if it was on any of the lists!

I'm happy to share whatever I can. After all, it wasn't all that long ago that it was me asking what an ODFI and RDFI were!

Thanks everyone - logic was telling me we should not have to check the institutions but I am always wary of applying logic to regulations.

Word of advice, be sure your service provider you are using has an OFAC filter system in it. The ACH transactions are not necessarily running through your internal bank system and you could be relying on your ACH service provider and not realizing it. Guess how I learned this?

Opinions are mine not my employer.

In terms of the ACH Network, all U.S. ACH participants, including Originators, Originating Depository Financial Institutions (ODFI), Receiving Depository Financial Institutions (RDFI), Receivers and third-parties need to be aware that they can be held accountable for sanctions violations by the U.S. Government.
The NACHA Rule reflects the "Know Your Customer" priciple that the ODFI will verify the Originator is not a blocked party and that a good faith effort will be undertaken to determine through the normal course of business that the Originator is not engaged in transmitting funds to, from, or on behalf of a party subject to a blocking action. The same goes for RDFI's.
In conclusion, for the safety of your institution, it would be wise to perform some sort of check against the OFAC listing.