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#95905 - 07/10/03 05:45 PM OFAC Check for New Loan Customers
Anonymous
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If we make a loan to a new customer (we have not implemented 326 rules yet) are we required to do an OFAC Check?

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General Discussion
#95906 - 07/10/03 05:46 PM Re: OFAC Check for New Loan Customers
Skittles Offline
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Skittles
Joined: Sep 2002
Posts: 13,963
TN
Yes, prior to disbursing funds. This is separate from the CIP guidelines.
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#95907 - 07/10/03 05:49 PM Re: OFAC Check for New Loan Customers
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,684
Cape Cod
Your regulator will strongly advise you to do so, although there is no law or regulation requiring it. But if you do business with someone on the OFAC list, you can get hit with some strong sanctions.

The regulators will use the "safety and soundness" 2x4 to get your attention.
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#95908 - 07/10/03 05:54 PM Re: OFAC Check for New Loan Customers
DeeQ Offline
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DeeQ
Joined: Dec 2002
Posts: 40,765
Turnpike Exit 10
Quote:

The regulators will use the "safety and soundness" 2x4 to get your attention.




OUCH!
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#95909 - 07/10/03 07:36 PM Re: OFAC Check for New Loan Customers
Anonymous
Unregistered

I thought checking new loan customers prior to disbursing funds WAS part of CIP. How do you check against OFAC prior to disbursing funds? Thanks

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#95910 - 07/10/03 07:44 PM Re: OFAC Check for New Loan Customers
DeeQ Offline
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DeeQ
Joined: Dec 2002
Posts: 40,765
Turnpike Exit 10
We run the names against our software as soon as the app comes in. Also, our credit bureau runs a check automatically when we order the credit report. Remember, this is OFAC and not the gov't lists referred to in section 326.
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#95911 - 07/10/03 07:49 PM Re: OFAC Check for New Loan Customers
111 Offline
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111
Joined: Jun 2003
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#95912 - 07/10/03 08:15 PM Re: OFAC Check for New Loan Customers
Anonymous
Unregistered

Maria, What software system are you using? Did you have to sign new agreements with credit bureau to include OFAC checks? Our current credit pulls do not check for OFAC. Thanks for the information.

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#95913 - 07/10/03 09:05 PM Re: OFAC Check for New Loan Customers
starfish Offline
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starfish
Joined: Jun 2003
Posts: 416
Seattle
The OFAC check is an added feature- you would need to request this from the credit bureau and they will add this to your credit report. I believe ours is an additional $0.25 per record?

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#95914 - 08/26/03 01:06 AM Re: OFAC Check for New Loan Customers
Anonymous
Unregistered

I was needing information on the following: What is everyone doing with respect to loan proceeds that are issued payable to someone other than our customer, i.e. another individual or entity? Are you checking the payee of a transaction, too? What is our responsibility in this area? How about the beneficiary of a letter of credit?

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#95915 - 08/26/03 01:31 PM Re: OFAC Check for New Loan Customers
redsfan Offline
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redsfan
Joined: Dec 2000
Posts: 3,455
The Pennant Race
You have a responsibility to block/freeze any transaction with a entity located in acountry on the banned list, or an individual or entity on the SDN list.

That said, the decision as to what transactions you will screen is a risk management decision. How much risk of an unauthorized transaction are you willing to assume? How much will it cost you to verify that the loan payee or LOC beneficiary is not on the OFAC list?
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