I have what I'm hoping will be a simple question. We recently just found out that our biggest competitor allows a customer to transfer funds from their bank to other banks using their internet banking. It sounds like a great service to offer, but we are concerned about OFAC and reporting. Does anyone know the rules on this? Thanks in advance...

Bump....
Maybe it's a harder question than I thought...

They may be performing the transaction through ACH origination or by wire transfer. We offer these options on a limited basis to select customers (carefully prescreened and monitored with pre-set limits).

I have also heard of a way that customers can transfer funds from one bank to another using debit cards (I believe it was through STAR). We never pursued it, so I don't recall all of the details.

It's also possible to do this through most billpayment systems. Many of the third-party ones now allow you to send a payment to almost anyone, and quite a few have added an option to send those funds via ACH in many cases.

I know that some of the bigger banks allow Wires online, but didn't that ability land at least one of them in court when a non-authorized person logged into a customer's account and wired all their funds out?

Thanks, Brenda.
Our competitors do it through ach, but have no preset limits and offer it to all customers (or at least that's what they told me when I called pretending to be a customer ). That's why I was asking, because it's our policy to run the name of the person receiving the transfer through OFAC if it's over a certain amount. But I wasn't sure if there were any exceptions if it were done through internet banking...

Oh, and thanks Banking Bard too.

Our online banking platform formats the wires so they can be loaded directly into Fedwire. For OFAC verification, we run the file through our OFAC software before loading it into Fedwire.

clownboy, you re not required to run the receiver thru OFAC for ACH, it is the responsibility of the bank holding the beneficiary account. Don't have my ACH rule book at home, but there is a provision in there that states this.

Our cash management and bill payment vendor verify payees to OFAC. As far as I know they do not differentiate between wire beneficiaries or ACH vs. check payees.

Happy, I think that it's fuzzy without more info. The original question wasn't clear if it was a business or consumer that was originating the transfer, or if it was via wires or ACH. If it was a business ACH transaction, then if the Originator's Bank has the proper contractual language in its ACH Origination Agreement, it is able to pass along most of the OFAC responsibility to its Originator. However, if it is a bill payment-type service for consumers then the Bank may be the Originator of the ACH transaction, in which case it does bear the monitoring responsibility. More details are needed to understand Clown Boy's initial question. Of course, if it's by wire then the Bank clearly has monitoring responsibility.