OFAC: What Your Examiner Expects

OFAC sets a compliance goal that may be useful for preventing the movement of funds by known terrorists and others, but the goal is nearly impossible to achieve - particularly for small banks. Fortunately, bank examiners have a more realistic approach. What an examiner expects a small bank to have in place will vary based on the bank's needs.

At ABA's National Graduate School of Compliance Management, Susan Quill, National Bank examiner with OCC, advised that examiners will look for whether there are systems in place to detect the countries and people on the OFAC list. For example, the examiner will determine whether the bank checks new accounts against the OFAC list and at least occasionally checks transactions against the list.

Quill explained that the examiners' expectations may differ based on the size of the bank. Examiners will take into account the reality of what the bank is capable of doing and also consider the bank's risk of exposure. Small banks generally can't afford or don't need a sophisticated system. Moreover, trained employees are more likely to identify foreign (out of town) customers in smaller communities. However, large banks would need and are more capable of implementing a sophisticated system.

It is worth noting that although the examination approach is reasonable, you can expect OFAC to show no mercy if a transaction occurs.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3, No. 7, 5/98