I need some advice that either backs up my position or shows me the light...

My institution finances its operations in part with brokered CDs. Currently, the broker maintains all of the information about the holders (of which there are many) of the CDs and does not send this information to our bank. My concern is that without this information, we cannot perform a check against the OFAC list. Am I correct in thinking that since my bank holds these funds, that the funds are subject to OFAC?

Any regulatory references would be useful.

Robert, how are the accounts titled? In the name of the broker or the name of the entity for whom the broker is "holding" the CD?

-- Tony

They are issued in our name.

Interesting question. We are in the process of a lengthy BSA review and the auditor asked if we accepted deposits from brokers. We do not, but it may be a good idea to document in your records that the broker has OFAC procedures in place. Especially since the funds are on deposit at your bank.

Iam intersted on the the "how to's" in registration of the Brokered CDs and the concerns with OFAC. Our bank usually receives it under the broker's name. An example,the credit union name is what is registered as our customer, but this entity is buying it for their customer. If we are checking OFAC on the credit union name, does this meet the OFAC's requirenment? I am seeing many banks in our area not accepting brokered CDs at all and wondering if the OFAC is becoming a key issue in their actions.

I encountered a similar situation in a recent audit. In this instance, the broker was an affiliated company. The broker had all the customer details and the total amount of brokered deposits was listed as a single amount on the bank's Trial Balance. The bank never has any details regarding the holder of these CDs; however, by agreement, the broker will provide the list for review for auditing purposes.

After much discussion, the solution we came up with was (1) get confirmation that the broker had a decent OFAC screening process in place and (2)include a review of this process (only as it pertains to the bank's brokered CD customers) to confirm it remains satisfactory as part of the annual BSA/OFAC audit.