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#73059 - 04/10/03 09:05 PM OFAC Review
Anonymous
Unregistered

Does anyone verify the SDN list prior to selling or cashing U.S. Savings Bonds to a customer or non-customer? I have never seen this service mentioned as a transaction type that should be checked to OFAC.

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General Discussion
#73060 - 04/11/03 05:52 AM Re: OFAC Review
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
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.
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#73061 - 04/11/03 06:01 AM Re: OFAC Review
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Well - and after saying all that, I should have added:
If you are checking your customers for OFAC at account opening, and screening your customer database everytime the OFAC list changes, then there should be no reason to check a CUSTOMER who is buying a Savings Bond.

Your risk is higher with a non-customer. This is one reason why more and more banks are refusing to sell monetary instruments to non-customers.

How ironic would it be to sell a U.S. SAVINGS Bond, an investment in this very country, to someone who has been declared an enemy of this country?
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#73062 - 04/11/03 04:24 PM Re: OFAC Review
J Hunt Offline
100 Club
Joined: Feb 2002
Posts: 132
Phoenix, AZ
But, if a paying/collecting agent for savings bonds, aren't we required to sell/redeem for non-customers (excepting redemptions over a certain dollar amount)? and, therefore, OFAC review would be necessary?
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#73063 - 04/11/03 04:48 PM Re: OFAC Review
AnnL Offline
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AnnL
Joined: Jan 2003
Posts: 334
Western PA
Yep!
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"The light at the end of the tunnel has been turned off due to budget cuts."

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