Disclosing OFAC False Positive Alert to Customer

Posted By: AUTigers65

Disclosing OFAC False Positive Alert to Customer - 06/23/21 06:04 PM

Unusual question here: Is anyone aware of a regulatory citation or any guidance that specifically states that banks are under no obligation to inform their customers that they were the subject of a potential OFAC alert - even if that alert was determined to be a false positive? And yes, I agree that doing so would be insanely difficult.
Posted By: BrianC

Re: Disclosing OFAC False Positive Alert to Customer - 06/23/21 06:26 PM

This is not a regulatory issue, but a contract issue. Somewhere your legal agreement should state that transactions are subject to review and approval and that the customers agrees not to perform any transactions that violate locate, state or federal law including OFAC.

To quote Andy Zavonia. Your contract follows the golden rule. "He who has the gold makes the rules."
Since there is no law/regulation that requires you to perform a transaction for a customer, you won't find one that says you are not required to perform one.
Posted By: HappyGilmore

Re: Disclosing OFAC False Positive Alert to Customer - 06/23/21 06:31 PM

Brian - i believe the question was "does any law prevent us from mandatorily notifying our client they showed up as a false positive when checking ofac."

John Q Customer gets a false positive hit. Does the bank HAVE to notify him?

Honestly, why would a bank do such? you know how many false positives are generated daily? anyone whose address is abbreviated "Dr." for drive may have a false hit for abbreviation of doctor which is also "Dr." quickly becomes a nightmare trying to ride herd on that
Posted By: BrianC

Re: Disclosing OFAC False Positive Alert to Customer - 06/23/21 06:39 PM

Read too fast.

Yeah. No reason to tell a customer that there was a potential match. I was answering a slightly different question.

"Do we have to tell the customer we are refusing a transaction due to a possible OFAC match?"
Posted By: AUTigers65

Re: Disclosing OFAC False Positive Alert to Customer - 06/23/21 07:16 PM

Thanks for the quick responses. And I absolutely agree that it would be nearly impossible to do this. By no means and I am suggesting that we are going to start the practice. Common sense is the best defense for not doing so. However, I was asked the question outright and could not find any guidance that discusses where banks were not obligated to do so. Perhaps such guidance does not exist, and that may be due to the common sense answer. Regardless, I thought I'd fish in the pond of knowledge here.
Posted By: BrianC

Re: Disclosing OFAC False Positive Alert to Customer - 06/23/21 07:44 PM

That part of my answer to the wrong question doesn't change. If there isn't a law that saws you "have to", you won't find one that says you "don't have to.

Said another way: "You can't prove a negative."
Posted By: ACBbank

Re: Disclosing OFAC False Positive Alert to Customer - 06/23/21 09:48 PM

Of course you can but why would you? I see no way in which that conversation goes over well with the customer.