I have a customer/builder writing large checks to his employee on a weekly basis - $5k - $7k. The builder comes in with the employee to cash the check; the employee endorses first then the builder endorses second and cashes the check. The builder is a known customer so the tellers do not get identification on him and since he endorses after the payee they are not getting the payee’s identification. They are, however, checking the payee/employee against OFAC. Our policy states that we check OFAC on all non-customer payees over $1000 and record identification on non-customers – payees over $3000. Our OFAC check is getting a match on two of the employee’s three names and I am 90% sure that it is a false positive but I cannot confirm or deny it is a valid hit unless I can compare this persons ID to the hit. The branches administrator was notified that the branch is not following bank policy and that identification needs to be obtained on the payees. The branch defends their actions stating that, technically, they are not making an exception since the employee and builder are presenting on-us checks we are able to verify funds and also that the last endorser is “vouching” for the non-customer. I understand their side because it is “technically” true but as the banks Compliance Officer I also understand that, per OFAC, banks must block transactions that are by or on behalf of a blocked individual or entity. If this branch continues to willfully ignore the intent of the customer – which is to give money to this employee – we will end up with severe penalties if the payee is found to be a blocked individual. This is a risk I would rather the bank not take. Does anyone have any comments - ideas - rants about the topic?

Is this check written jointly to the employee and the customer/builder? If not, why is the customer/builder providing an (unnecessary and legally useless) endorsement of the check?

Oh, and yea, you're way up the river without a paddle (ie: in willful noncompliance of bank policy) on this one.

Thanks so much for responding! No the checks are not written jointly. The builder writes out the checks then comes into the bank with the people he writes them to. They endorse it, then he endorses and the tellers cash it. See, I know this but I just needed some back up. I was named Compliance Officer last week and management has not announced it yet so I can't use the full force of the title until they do.

If the amount of the checks cashed exceeds $10K, you have to fill out a currency transaction report on the builder, since in essence he is getting the cash (and distributing it to the others).

Re OFAC - the laws are specific enough that we cannot do business with them in any manner. Yes, the risks are low, but the fines are great.

For those with name matches, you may want to push the issue and get additional ID's, or have Branch Adm provide you a letter acknowledging that they're accepting the risk. Compliance can advise management of the risks, but not usually force compliance.

Yes, CTR's are being filed. I opted to push and they have agreed to check OFAC on all payees over $1000 and get proper identification. Thank you so very much for your response.