I would appreciate your thoughts regarding the following and whether we should do an OFAC check of the “Payee Name”.

As a courtesy to a Business Account customer, we allow its employees to cash their pay checks at our branch. These checks are drawn on the Business Account maintained at our Bank, but the employees (check payee names) are not necessarily account holders at our bank. Consequently, these payees have not been OFAC checked by us nor been subject to more robust CIP verification.

If we continue to allow these non-accountholders (payees) to cash checks, should we be performing OFAC checks?

Note that we have performed an enterprise-wide OFAC assessment and concluded that our general OFAC Risk is moderate.

Thanks

We have our tellers perform OFAC checks on non-customers cashing checks. If they have a possible match, they email or call our risk management dept. We check the SDN list and get right back to them.

Why would you be concerned about checking 3, 5, 10 ?? non-customers per day yet you have thousands of checks clearing at night and you are not checking the payees on those checks? I agree about the risk asessment part. Document that these non-customers pose a low risk and move on. Unless you have a large BSA staff, you won't always have someone available to respond to a potential hit. IMO, tellers have enough to worry about and when was the last time we read about an OFAC violation at a bank? The greatest OFAC risk identified are people buying Cuban cigars over the Internet.

I agree with BSA guy. Your risk is no greater than if they deposited the checks at their own bank and cleared it that way. They are still the payee.

In regard to "yet you have thousands of checks clearing at night" – As there is no way to electronically capture the payee name, I think it would be unreasonable for a Regulator to expect that checks clearing at night be manually inspected to ensure that payee names are not on the OFAC list. This is significantly different from cases where the check is in the hands of a Teller and the payee name is readily available for an OFAC check.

At our bank we check all payee names on ON-US checks over $2,500.00 that are being cashed or converted to cashier's checks.

Rant warning

Running OFAC checks on on-us items cashed over the counter is the most ridiculous of all the ridiculous OFAC interpretations. You do not have enough information to disallow the match, but the chances that the real Abriel Cortez came to your bank to cash a $50 check are infinitesimally small.

I would do it when someone could discredit my OFAC risk assessment enough to make me do it. Not likely.

[End rant]

Thanks Ken! How many of us have a Maria Gonzalez as a customer. I am notgoing to have our tellers hold up poor Maria for 1/2 hour while we find someone to verify she isn't the real one from Columbia. We are fueling the OCC, FED, or FDIC fire by having some of these procedures in place!

Thanks for the feedback and the tempered <?> rant. Fortunately I'm from NY so I'm not so sensitive that I would be offended by the characterization of my concern as being ridiculous. However, as always, your thoughts were much appreciated.

I am told that when you are conducting a transaction, you should do an OFAC check. The checks that clear by cash letter, the transactions are conducted at another place. I think that is the difference.

LiveFromNYC,

I need to work on my communications skills. I do not think your concern is ridiculous. This issue comes up in examinations all the time and every bank needs to make and be able to defend its decision on this point.

What I think is patently ridiculous is that anyone at OFAC believes this exercise to be of any real value. You are not responsible for that.

I'm not the compliance expert here so i am asking, when is it absolutely without a doubt necessary to run the OFAC check?

nbk - this is a question I would ask your BSA officer.

Our regulator told us that for manual processes that OFAC expects us to perform OFAC checks on all manually processed items, including official checks and manually processed checks. (ie. checks cashed over the counter)

Based on my OFAC risk assessment we are a low risk institution and this seems completely ridiculous to me. I'm still fighting it....

Along these same lines we have caught many non-customers cashing on us checks at several branches to structure the cash so as not to report. How do you aggregate and catch those individuals?

Ken,

Your communication skills are solid and your responses are always helpful and thought provoking.

I couldn't ask for more gracious support.

And speaking of ridiculous...see my most recent post titled "Is a CTR Required". It's pretty sad even by my standards.

Thanks again for taking the time to share your thoughts.

Respectfully
Chuck

BAT - It is impossible to catch absolutely everything when you have multiple branch offices. Establish the target amount you are trying to reach and then determine the resources it will need for you to meet the goal. For example, if you decide that you want to aggregate every item of $3000 or more, you could: utilize teller system parameters to capture conductors on each cash in/out for $3000-$10,000 (if available); you could create a daily report (or shared spreadsheet) to capture info on conductors of transactions between $3000-$10,000 and aggregate in the back office.

I've seen it done a number of different ways. You have to decide where your breakpoint is going to be and what it is worth to you in man-hours to reach that goal. I've seen aggregation amounts set as low as $500 for manual tracking. Personally, I think that is ridiculous.