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#861173 - 11/27/07 06:15 PM OFAC & Authorized Signers
ComplianceGurl, CRCM Offline
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Is it true that an OFAC check cannot be done on authorized signers for business accounts without their written consent?

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#861179 - 11/27/07 06:16 PM Re: OFAC & Authorized Signers ComplianceGurl, CRCM
rlcarey Online
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No.
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#861198 - 11/27/07 06:27 PM Re: OFAC & Authorized Signers rlcarey
ComplianceGurl, CRCM Offline
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Ok..how about ChexSystems?

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#861210 - 11/27/07 06:37 PM Re: OFAC & Authorized Signers ComplianceGurl, CRCM
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We perform OFAC & ChexSystems verification on all owners and signers of accounts, including business accounts. The only names not checked are Beneficiaries as they do not have access to the funds during the owners lifetime.
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#861261 - 11/27/07 07:06 PM Re: OFAC & Authorized Signers mck401
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I would not necessarily exclude beneficiaries. We base it on risk. Please see the following which appears on page 256 of the BSA Exam Manual.

Management and examiners should be aware that OFAC list-matching is not a BSA requirement. However, since trust systems are typically separate and distinct from bank systems, verification of these checks on the bank system is not sufficient to ensure that these checks are also completed in the trust and asset management department. Moreover, OFAC's position is that an account beneficiary has a future or contingent interest in funds in an account and, consistent with a bank's risk profile, beneficiaries should be screened to assure OFAC compliance. Refer to the core overview section, "Office of Foreign Assets Control," page 137, for additional guidance.
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#861280 - 11/27/07 07:18 PM Re: OFAC & Authorized Signers mck401
rlcarey Online
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Originally Posted By: mck401
We perform OFAC & ChexSystems verification on all owners and signers of accounts, including business accounts.


You might want to review the FCRA and the FTC Opinion Letters, specifically the Tatelbaum II letter:

http://www.ftc.gov/os/statutes/fcra/tatelbaum2.shtm

If you are running ChekSystems on authorized signers you need to be getting written permission to run a credit report.
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#861293 - 11/27/07 07:25 PM Re: OFAC & Authorized Signers rlcarey
ComplianceGurl, CRCM Offline
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It sounds like that is more for business loans/loc. Does that apply to a deposit account as well? I'm confused..

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#861302 - 11/27/07 07:31 PM Re: OFAC & Authorized Signers ComplianceGurl, CRCM
rlcarey Online
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Unless the authorized signer is personally liable for the deposit account, i.e., you can go after them personally for overdrafts or a charge-off, the same principle applies.
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#1509062 - 02/11/11 06:06 PM Re: OFAC & Authorized Signers rlcarey
The OG Zaibatsu Offline
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I know this is an old thread, but I just found this on the OFAC FAQ:

Does a financial institution have the obligation to screen account beneficiaries for compliance with OFAC regulations?

"Property," as defined in OFAC regulations, includes most products that financial institutions offer to their clients. "Property interest," as defined by OFAC, includes any interest whatsoever, direct or indirect, present, future or contingent. Given these definitions and as a matter of sound banking practice, it is prudent for financial institutions to screen account beneficiaries upon account opening, while updating account information, when performing periodic screening and, most definitely, upon disbursing funds. Where there is a property interest of a sanctions target under a blocking program, the property must be blocked. Beneficiaries include, but are not limited to, trustees, children, spouses, non-spouses, entities and powers of attorney. [12-04-06]
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#1509104 - 02/11/11 06:26 PM Re: OFAC & Authorized Signers The OG Zaibatsu
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Florida's DFI made hay on this little missive a few years ago, citing it as the foundation for a requirement to check beneficiaries. John railed about it more than once. They eventually backed off. (Perhaps not because of John.)

Note that OFAC's list of who would be included as a "beneficiary" is at odds with the concept of who might inherit property by operation of state law; e.g. entities and powers of attorney.

Bottom line is a ITF or POD beneficiary has no interest in the property until it's disbursed and can be changed at any time. Even if you got a bona fide OFAC hit on a beneficiary, you would have no right, let alone an obligation, to block the funds.
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