OFAC Risk Assessments
Monday, January 21st, 2008The primary objective of an OFAC Risk Assessment is to assess the bank’s risk-based Office of Foreign Assets Control (OFAC) program to evaluate whether it is appropriate for the Bank’s OFAC risk, taking into consideration its products, services, customers, transactions, and geographic locations.
An OFAC Risk Assessment should not be designed to be a full formal audit of the Bank’s OFAC Compliance program. The OFAC Risk Assessment should not involve any transactional testing of any kind and should relied solely on the information obtained from the Bank.A fundamental element of a sound OFAC program is the Bank’s assessment of its specific product lines, customer base, and nature of transactions and identification of the high-risk areas for OFAC transactions. In evaluating the level of risk, the following indicators should be considered.
- International Funds Transfers
- Nonresident alien accounts.
- Foreign customer accounts.
- Cross-border automated clearing house (ACH) transactions.
- Commercial letters of credit.
- Transactional electronic banking.
- Foreign correspondent bank accounts.
- Payable through accounts.
- International private banking.
- Overseas branches or subsidiaries.
Another consideration for the OFAC Risk Assessment is account and transaction parties. Are new accounts are compared with the OFAC lists prior to being opened? During the interview process with the Bank, it should be determined if all account beneficiaries, guarantors, principals, beneficial owners, shareholders (over 10% ownership) as well as all authorized signers and individuals named in the corporate documents (articles of incorporation) are checked against the OFAC list.