OFAC and wire transfers

Posted By: CantBeShocked

OFAC and wire transfers - 05/05/06 01:19 PM

I came from a larger bank that performed OFAC checks on all parties to a wire. We did not conduct wires for non-customers so we mainly conducted the checks for beneficiaries and beneficiary banks on outgoing wires and originator and originating banks on incoming wires.

I now work for a smaller bank who only conducts checks on beneficiaries and beneficiary banks (when they have time) on outgoing wires. We also do not conduct wire transfers for non-customers. The Compliance Manager for the bank said that the SENDING bank is responsible for OFAC compiance on their end and therefore, that is why we do not check the incoming wires.

Am I not correct that we should be checking this in case of transactions that need to be accepted and then blocked or rejected altogether.

Thanks
Posted By: Hrothgar Geiger

Re: OFAC and wire transfers - 05/05/06 01:33 PM

Just my opinion...

You cannot rely on the the sending bank for any screening. Suggesting that, as a matter of policy, you rely on other banks to screen the parties transacting business with your customers, seems to imply that you have some knowledge of their processes/policies/capabilities to perform OFAC (or other applicable sanction screening.)

I agree with you that you should be checking the incoming wires yourself.

Since I'm a barbarian, I've been known to say to people (re: OFAC screening) "The government provides the list, you own a computer. What's the problem?" (I do tend to smile when I say it....)
Posted By: CantBeShocked

Re: OFAC and wire transfers - 05/05/06 01:34 PM

I like you :-)
Posted By: Hrothgar Geiger

Re: OFAC and wire transfers - 05/05/06 01:36 PM

Awwwwww, shucks.
Posted By: Elwood P. Dowd

Re: OFAC and wire transfers - 05/05/06 01:44 PM

Quote:

The Compliance Manager for the bank said that the SENDING bank is responsible for OFAC compiance on their end and therefore, that is why we do not check the incoming wires.




The factual statement is correct, but the conclusion it's attempting to support is way off. The other bank is responsible. However, as AMLBarbarian indicates, so are you. That applies to wires, ACH entries - everything.

Offering another bank's failure as a defense for your own would prolong the penalty assessment process, but it would not change the result. You check incoming wires or you don't check them based on your risk assessment.

I would advocate checking every field on every wire, regardless of which direction it's going. I'll take my risks elsewhere.
Posted By: Hrothgar Geiger

Re: OFAC and wire transfers - 05/05/06 01:51 PM

To add to Ken's point on the penalty assessment process: Part of the "new" process includes a review of your bank's processes and controls for OFAC screening. Relying on the other guy wouldn't strike me as a robust process, or one that I'd want to present to Treasury with a straight face.