BSA/AML Examiner School Case Study

Internal Use Only

OFAC Screening for ACH Transactions All parties to an ACH transaction are subject to the requirements of OFAC. For domestic ACH transactions, the Originating Depository Bank (ODFI) is responsible for verifying that the originator is not a blocked party and making a good faith effort to determine that the originator is not transmitting blocked funds. The Receiving Depository Bank (RDFI) similarly is responsible for verifying that the receiver is not blocked party. In this way, the ODFI and the RDFI are relying on each other for compliance with OFAC polices and due diligence on their customers. All ACH customers must be checked against the OFAC list. The ACH personnel must ensure that the account officer has performed adequate due diligence on these customers. If an ACH personnel received a batch transaction from one of our customers, the ACH personnel is not responsible for unbatching transactions to ensure that the customer does not process transactions in violation of OFAC regulations. However, if the Bank, as an Originating Depository Bank, unbatches (errors, wrong information) the ACH transactions received from our customers, then the ACH personnel will be responsible for screening all names against the OFAC list as though we had done the initial batching. Commercial Loans/Consumer Loans/Letters of Credit It is the practice of the AJ&R Bank to establish credit to customers who do not or will not have a deposit account at the Bank. On these occasions, where loans are established the Bank, even though the customer does not have a deposit account with us, the procedures outlined below need to be followed to comply with the Office of Foreign Assets Control. Note: Remember, in order for the OFAC System to automatically verifying all applicants and guarantors against the Bank's current OFAC listing, a CIF file must be created for the applicants and guarantors. Manual verification is possible by doing an OFAC inquiry. At the time an application is received, the loan officer must inquire with the Office of Foreign Assets Control on the individual, individuals or a company requesting credit. This can be done by doing an inquiry on OFAC Tracking System. If after the inquiry, there is a match, the loan officer will then notify the OFAC compliance Officer or BSA Department. The OFAC compliance Officer will then contact the Office of Foreign Assets Control at (800) 540-6322 for clarification and confirmation of the match. If there is a positive match, the OFAC compliance officer will then follow the procedures given by the Office of Foreign Assets Control, and the loan officer will not proceed with the loan application process. If the inquiry is not a match, the loan officer will proceed with the loan application process. If the OFAC compliance officer or BSA Department personnel are not available at the time a positive match is obtained, the loan officer under the direction of Senior Management will then call the Office of Foreign Assets Control for clarification and confirmation of the match and proceed as instructed. The loan officer will notify the OFAC compliance Officer of the results of the match as soon as deemed possible.

For Training Purposes Only

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