OFAC on Payees that Bank is Paying

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Question:

Do we need to check OFAC on the payees when the bank’s internal account payable department pays the bills for supplies, services, etc.?

Answer:

As with all things OFAC, your bank's management should complete a risk assessment of various types of transactions to determine whether the bank will check names against OFAC for each transaction type. For example, most banks would agree that wire transfers are high risk of causing OFAC problems and routinely check (or have a third party check) them against the OFAC lists. On the other hand, banks generally agree that checking payees on inclearing checks is prohibitively expensive when weighed against the risk of an OFAC infraction and don't bother. Your accounts payable transactions should be analyzed to determine whether your bank's management will require them to be vetted against the lists, or not.

First published on BankersOnline.com 5/28/07