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OFAC - Cashing Non-Customer Payroll Checks

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Question: 
We cash payroll checks for one of our business customers. The employees of this company are not our customers. Do we need to do an OFAC screen on each of these workers when they come to our bank to cash their payroll checks?
Answer: 

It's been fairly well established that there is no regulatory requirement that anyone check the OFAC lists before doing anything, but all U.S. persons, including your bank, are prohibited from doing business with persons and entities that are included on those lists. Whether or not your bank checks a particular type of transaction (cashing payroll checks, sending wire transfers, opening accounts, selling cashier's checks, etc.) against the OFAC lists is a risk-mitigation decision. Your management should review the risks that a particular activity will result in an OFAC infraction (and the costs involved in such an infraction), and weigh those risks against the financial and other costs of completing OFAC checks for that activity. From there, it's a business decision.

First published on BankersOnline.com 7/17/06

First published on 07/17/2006

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