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#860889 - 11/27/07 02:30 PM Payroll Cards & OFAC
CantBeShocked Offline
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Are any of you offering the payroll cards that employers can buy to pay employees ? We are going to be offering them within the next year. We sell the cards to the employers but we pass the payroll to the employees via ACH much like Direct Deposit.

What are our OFAC responsibilities ? No one checks current payees on ACH debits other than your own customers. We do check both parties to a wire but that is done before sending the wire and it can be stopped if a match is found.

With these, we will receive an ACH file from the employer and just process the ACH file.

My direct assumption so that the OFAC check is the responsibility of the employer - right ??

Thanks guys !
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#860964 - 11/27/07 03:44 PM Re: Payroll Cards & OFAC CantBeShocked
BrendaC Offline
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We screen all of our ACH files to OFAC, both incoming and outgoing. As ODFI, I believe we would be liable for originating an ACH to a person on one of the OFAC lists or to a sanctioned person/country.
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#860973 - 11/27/07 03:47 PM Re: Payroll Cards & OFAC BrendaC
Auditor247 Offline
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What methods do you use to verify your ACH transactions against OFAC?

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#860974 - 11/27/07 03:47 PM Re: Payroll Cards & OFAC BrendaC
#Just Jay Offline
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So as an ODFI, are you unbatching the incoming files to run OFAC?

We are becoming an ODFI, and my understanding was that we need to OFAC our customer who originates the ACH, but we did not have to OFAC their batch, unless we choose to open it up, or unbatch it.

Educate me please!
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#860982 - 11/27/07 03:52 PM Re: Payroll Cards & OFAC #Just Jay
BrendaC Offline
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ACH verification is automated by our core processor and functions the same way as automated screens for new customer data entry and wire transfers. Any potential match (to any field) appears as a suspect for review. We can certify the match to prevent recurrence of false positives.
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#860993 - 11/27/07 04:01 PM Re: Payroll Cards & OFAC BrendaC
rlcarey Offline
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Remember that OFAC checking is totally based on an individual bank's risk assessment. Unbatching ACH files for an OFAC check might be appropriate for one institution and not really applicable to another - depending on the risks presented.
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#864975 - 12/03/07 06:16 PM Re: Payroll Cards & OFAC rlcarey
CantBeShocked Offline
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Does anyone else have anything to add ?

I asked our ACH coordinator and she stated that we do not unbatch and that she had never heard of unbatching. I have but she hasn't.

Thanks again
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#870377 - 12/11/07 03:54 PM Re: Payroll Cards & OFAC CantBeShocked
CantBeShocked Offline
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Moving my question up for help hopefully - I've been out of town until today.

Thanks.
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#872829 - 12/14/07 12:09 AM Re: Payroll Cards & OFAC CantBeShocked
homestar Offline
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This is an area that is definitely more complicated and risky than most of us are aware. There are many unforseen traps and pitfalls associated with payroll cards, both from a compliance and a fraud perspective.

Be very sure you understand what you're getting into and understand exactly how the program is set up from start to finish. Are you issuing the payroll card? Are you processing the individual transactions? If not, who is and who is responsible for what?

My suggestion is that you need to make sure you get advice from competent counsel who has experience with payroll cards. A word to the wise should be sufficient.
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#873609 - 12/14/07 08:15 PM Re: Payroll Cards & OFAC homestar
BrendaC Offline
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Based on recent discussions with regulators, we can (AT THIS TIME) equate payroll cards with payroll checks. Our customer is the business. Procedures should be in place to identify suspicious activity with regard to the cards (such as a payroll card that builds a balance, unusual transfers of card value, multiple cards to same individual, etc.). Your vendor will play a significant role in this process so make sure you understand back office monitoring procedures and process to notify you of potential problems. Oversight of the process will be an important factor in developing and maintaining a satisfactory AML program relative to this product.

Based on comments I have heard, I suspect this is a hot topic in Washington and we can expect to see some significant changes down the road. But that's just my opinion.
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