Does a financial institution have a responsibility to perform an OFAC check the entity and borrowers for purchased loans and participation loans?

Better safe than sorry; OFAC is all about mitigating the risk of completing a transaction that would result in violating OFAC. If you buy loans and participations from another bank that has the same OFAC regulations and the same compliance program your bank has, then you may be safe in assuming the other bank checked OFAC, but who wants to make that assumption. But then again, did you complete a transaction for a customer but completing a secondary market transaction with another financial institution ? There is a good chance the answer is no, so my vote is buying loans and participations is not subject to an OFAC check. This opinion and 50 cents will buy you a coke.