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#595945 - 08/09/06 09:17 PM regulators are here and I have a problem with OFAC
Nick Phillips Offline
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Joined: Apr 2003
Posts: 43
illinois
Here is the scoop. Is there any substantial information I get find that addresses the fact that we should or should not check incoming wire transfer originators against the OFAC list? I know the regulation states that banks must not do business with any entity on the OFAC list SO it could be inferred that we must check incoming wire transfer originators in addition to the originating bank checking their customer (who would be the originator). If that is the case my management wants proof that that is the intention of the regulation for us to check not only our customer's but the originators of incoming wires as well.

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#595946 - 08/09/06 09:24 PM Re: regulators are here and I have a problem with OFAC
Princess Romeo Offline

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OMG - What rock has your management been hiding under?

Here's the thing with OFAC - you are not violating anything if you are not checking transactions. OFAC has NO requirement that you check anything.

HOWEVER........

The penalties for not blocking (or rejecting in some cases) a transaction involving an OFAC listed party can be very severe. The severity of the penalty is based on the steps that your institution took to try to prevent it. If your institution is not taking any steps (i.e. not checking wire transfer to see if Bin Ladin is wiring to your customer who may be in an Al Queda sleeper cell), you can expect the penalty book to be thrown at your institution.

Quite frankly, you don't need to check your own customers on a wire transfer if you have systems in place to screen your customer at account opening and screen our customer database when changes are made to the OFAC list. It's the OUTSIDE parties you need to worry about - i.e. the sender of an incoming wire or the beneficiary of an outgoing wire.

Checking the OFAC list is a risk based procedure. The higher your risk, the more you should be checking. Wire transfers and new accounts are your very highest risk. Your program should have procedures that are in line with mitigating that risk.
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#595947 - 08/09/06 09:36 PM Re: regulators are here and I have a problem with
Kathleen O. Blanchard Offline

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Also, any bank that has "wire software" will usually be automatically checking all words in the wire, names, towns, ships, banks, etc. That is what the regulators will see at other banks who have wire software. It is the "standard".

While there is no rule that says you have to check, the law does say you cannot do business with anyone on the lists. The only way to comply is to check.
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#595948 - 08/09/06 09:44 PM Re: regulators are here and I have a problem with
Dip Offline
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San Diego, CA
The OCC has told me several times recently to check (as a best practice and to avoid penalty) the originators on incoming wires and the payees/remitters on cashier's checks. They have also told me to start checking our A/P vendors on a regular basis or before we issue any funds.
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#595949 - 08/09/06 09:53 PM Re: regulators are here and I have a problem with
dare2dream Offline
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California
It's all risk based as stated above, while we do not check our CC's and those type of transactions, we do check everything on wires and all our customers. There is some decent software out there that can help you with this.
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#595950 - 08/09/06 10:58 PM Re: regulators are here and I have a problem with
Hrothgar Geiger Offline
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Quote:

Here is the scoop. ... I know the regulation states that banks must not do business with any entity on the OFAC list SO it could be inferred that we must check incoming wire transfer originators in addition to the originating bank checking their customer (who would be the originator). If that is the case my management wants proof that that is the intention of the regulation for us to check not only our customer's but the originators of incoming wires as well.




First of all, I echo BonnieM's question about the rock!

Second, get thee to Treasury's OFAC website and download the text of the original executive order. Show it to management, and the bank's attorney. It pretty much lays out the who and the what of "do not do business with...".

In fact, if reading it doesn't make you immediately want to check your cleaning crew, copier repair-person and the guy that sell you coffee in addition to the originating party and bank on wires, well, read it again....

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#595951 - 08/10/06 04:58 AM Re: regulators are here and I have a problem with
Princess Romeo Offline

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Princess Romeo
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Where the heart is
Quote:

The OCC has told me several times recently to check (as a best practice and to avoid penalty) the originators on incoming wires and the payees/remitters on cashier's checks. They have also told me to start checking our A/P vendors on a regular basis or before we issue any funds.




This one always cracks me up - especially when banks wind up checking if Deloitte and Touche is on the OFAC list, YMCA, the March of Dimes, Con-Edison, etc., etc.

BUT....banks do it because it's easier just to check the damn list to make sure Deloitte hasn't slipped over to the dark side, than argue with an examiner as to why you didn't feel it was necessary.

I wonder if banks are checking the the Federal Home Loan Bank or the Federal Reseve before they settle their accounts..........
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CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#595952 - 08/10/06 01:20 PM Re: regulators are here and I have a problem with
MagicCity Offline

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MagicCity
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Fort Lauderdale, Florida
I am sure they do. Why not? We check BOA, Wachovia, Citibank et al fifty thousand times a month.
It' silly.

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#595953 - 08/10/06 01:45 PM Re: regulators are here and I have a problem with
Hrothgar Geiger Offline
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Hrothgar Geiger
Joined: Jun 2005
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Jersey Shore
Magic City,

Here's your OFAC haiku

Long list of villains
Big computer to find them
Cycles are cheap.

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#595954 - 08/10/06 01:54 PM Re: regulators are here and I have a problem with
Laketime Offline
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Posts: 554
I guess I am missing some of the logic of checking payees on Cashier's Checks. If we only sell CCs to customers (that have gone through regular OFAC scans) why should we only care about CCs? If are customers are going to sent Uncle Bin $5,000 why not just write him a check from their checking account. To prevent this, should we be checking every check that is written out of our checking accounts to look for possible matches? Our customer is not going to ask a teller to make a CC to Uncle Bin because it would raise the profile of the event. Or conversely, should we be running every single deposited item to an account through an OFAC scan? (Uncle Bin sent our customer $1,000 for his birthday). So far our examiners have not suggested we review CCs, but when they do I am not going to ask why?, but when?
"If you want CCs checked then when are we to start checking OFAC for All checks being written by our customers and when are we to start checking OFAC for All deposited items?"

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#595955 - 08/10/06 02:02 PM Re: regulators are here and I have a problem with
Skittles Online
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Skittles
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TN
A bank would have a violation of a customer wrote a check out of their account payable to an entity on the OFAC list. The bank is charged with determining how much risk it is willing to take and I can't imagine any bank checking all inclearing items. The cost/benefit would be so far in the negative.
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#595956 - 08/10/06 02:37 PM Re: regulators are here and I have a problem with
Angel Eyes Offline
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Angel Eyes
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Magic City - we do too! And to my shock when the examiners were here a couple of months ago, their comment was "do you realize that your wire people are checking everyone through OFAC?" My answer "Yes." (Thinking to self - is this a trick question?) Then they went on to say that we really didn't need to check every one everytime (i.e. b of a, citicorp, etc.) and suggested that we may want to reevalute our process. WHAT??????
It wasn't written critisism but I guess we do too much!?!? I think they live to confuse us, because I am sure the next examiner to come in will say...everyone on a wire should be checked every time a wire is made. Sometimes you just can't win

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#595957 - 08/10/06 03:52 PM Re: regulators are here and I have a problem with
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,277
Jennifer, if your process is manual, it would make sense to have a list of entities like Citi, Wachovia, local law firms who wire, etc. and check them periodically rather than with every wire.

If your process is automated, then just let the software check every word in the wire.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#595958 - 08/10/06 04:46 PM Re: regulators are here and I have a problem with
MagicCity Offline

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MagicCity
Joined: Apr 2003
Posts: 3,003
Fort Lauderdale, Florida
For the others that read AML and went Huh? Like I did....


Haiku is a mode of Japanese poetry, the late 19th century revision by Masaoka Shiki of the older hokku, the opening verse of a linked verse form, haikai no renga. A traditional hokku consists of a pattern of approximately 5, 7, and 5 morae, phonetic units which only partially correspond to the syllables of languages such as English. It also contains a special season word (the kigo) descriptive of the season in which the renga is set. Hokku often combine two (or rarely, three) different elements into a unified sensory impression, with a major grammatical break (kire) usually at the end of either the first five or second seven morae. These elements of the older hokku are considered by many to be essential to haiku as well, although not always included by modern writers of Japanese "free-form haiku" and of non-Japanese haiku.

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#595959 - 08/10/06 05:22 PM Re: regulators are here and I have a problem with
Angel Eyes Offline
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Angel Eyes
Joined: May 2001
Posts: 4,599
Kaybee, we are considering that....but I am of the mindset the more simple I keep it the more likely they will follow it (KIS - keep it simple). The more rules they have to follow the more confused they get and the more they mess up! Then somehow it is my fault that I tried to ease their burden but made things more difficult. :shrug: I just can't win........

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