OFAC covers anything and everything that could possibly happen at your financial institution including, but not limited to:
Deposit Accounts
Safe Deposit boxes
Wire Transfers
Letters of credit
ACH transfers
Savings Bonds
Official Items
Payees on checks that your customer writes
Makers of checks that your customer deposits
Any third party endorsements on any of those items
Vendors you pay
Brokers you use to purchase institutional investments
and so on.....
The OFAC regulations do not actually require that you check anything. HOWEVER - the OFAC regulations WILL impose sanctions on you if you have ANY transaction that involves a person, country, or entity on the list.
So - you essentially have the perfect example of a risk management issue. What is the risk of a certain transaction involving an OFAC entity, vs. what is the cost to check that transaction?
Realistically, I don't know of anyone who is able to screen the payees of checks their customers write - heck we don't even screen our own customer's signatures! The risk is there but should be low since, in order for the OFAC person to negotiate the check, that person would have to have an account at a U.S. Bank that SHOULD be screening their account holders for OFAC.
That reasoning won't get you out of OFAC hot water if you do pay a check that your customer wrote, but the simple logic should greatly reduce the liklihood of it happening.
On the other hand, the likelihood of a Wire or a Letter of Credit involving an OFAC entity is much higher, and it's relatively quick and simple to check these types of transactions.
Sorry - there are still no clear guidelines. We all have to negotiate this little minefield as we think best.
I have said this once, and I'll say it again. If every company and person were to check the OFAC list for every transaction they conduct, commerce and trade in this country will come to a screeching halt. Best of luck.
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CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'