OFAC & Purchase of Cashier's Checks

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Question:

We are in a discussion with our BSA officer regarding this situation and need some direction. We currently sell cashier’s checks only to customers of our institution. We currently check OFAC on the payee in addition to the purchaser (our customer) which is covered by our routine OFAC check. Periodically, we have customers who purchase cashier’s checks for other persons, such as children, family members or others and they ask us to list these other names in the remitter portion of the checks. Do we have to check OFAC on this additional person even though we have checked the payee and purchaser? If we did, wouldn't we be exposing ourselves to collect CIP since we have allowed them to conduct a transaction via our institution? We are trying to establish the line between "memo information" as the memo information on a personal check, and "memo information" as transaction information that is covered by OFAC/BSA.

Answer:

You are not obligated to check anyone against the OFAC SDN listing. If the remitter of the check is on the SDN listing, though, you are prohibited from processing the transaction. It's a matter of risk assessment and bank policy. You have to assess the likelihood that a remitter would be on the list, and weigh that against the cost and effectiveness of a check of remitters and determine whether your bank policy will be to check or not. If you determine to check, I don't think that opens you up to a CIP obligation. CIP is required for "customers" and that is a defined term that indicates an ongoing relationship.

First published on BankersOnline.com 6/22/09