Risk Management Manual of Examination Policies - FDIC

BANK SECRECY ACT, ANTI-MONEY LAUNDERING,
AND OFFICE OF FOREIGN ASSETS CONTROL
situation and provide corresponding guidance on this area
in its policy. If the financial institution does plan to close
an account that is under investigation by law enforcement,
then the institution should notify law enforcement of its
intent to close the account.
SAR Database
If examiners need specific SAR filing information, they
should contact their Regional SACM or other designees.
These specially designated individuals have access to the
FinCEN computer system and the database containing
records of SAR filings. The database contains information
from SARs filed by all federally insured financial
institutions. The database is maintained according to the
numbered reporting fields in the SAR form, so information
can be searched, for example, by suspect, type of violation,
or location.
Under current guidance, examiners should obtain a listing
or copies of the SARs filed in the current and previous two
years by a financial institution for pre-examination
planning purposes. Additional searches may be requested
as needed, such as to identify whether a SAR has been filed
for suspicious activity discovered during the examination,
or to obtain information about additional SAR filings on a
particular suspect or group of transactions.
For additional guidance on obtaining SAR data, refer to the
detailed instructions provided within the “Currency and
Banking Retrieval System” discussion within the
“Financial Crimes Enforcement Network Reporting and
Recordkeeping Requirements” section of this chapter.
OFFICE OF FOREIGN ASSETS CONTROL
The Treasury’s Office of Foreign Assets Control
administers laws that impose economic and trade sanctions
based on foreign policy and national security objectives.
Sanctions have been established against various entities
and individuals such as targeted foreign countries,
terrorists, international narcotics traffickers, and those
engaging in activities relating to the proliferation of
weapons of mass destruction. Collectively, such
individuals and companies are called Specially Designated
Nationals (SDNs) and Blocked Persons.
OFAC acts under Presidential wartime and national
emergency powers, in addition to authority granted by
specific legislation. OFAC has powers to impose controls
on transactions and to freeze foreign assets under U.S.
jurisdiction. Sanctions can be specific to the interests of
the U.S.; however, many sanctions are based on United
Section 8.1
Nations and other international mandates. Sanctions can
include one or more of the following:
• Blocking of assets,
• Trade embargoes,
• Prohibition on unlicensed trade and/or financial
transactions,
• Travel bans, and
• Other financial and commercial prohibitions.
A complete list of countries and other specially-designated
targets that are currently subject to U.S. sanctions and a
detailed description of each order can be found on the
Treasury website.
OFAC Applicability
OFAC regulations apply to all U.S. persons and entities,
including financial institutions. As such, all U.S. financial
institutions, their branches and agencies, international
banking facilities, and domestic and overseas branches,
offices, and subsidiaries must comply with OFAC
sanctions.
Blocking of Assets, Accounts,
and Transactions
OFAC regulations require financial institutions to block
accounts and other assets and prohibit unlicensed trade and
financial transactions with specified countries. Assets and
accounts must be blocked when that property is located in
the U.S., or is held by, possessed by, or under the control
of U.S. persons or entities. The definition of assets and
property can include anything of direct, indirect, present,
future, and contingent value. Since this definition is so
broad, it can affect many types of products and services
provided by financial institutions.
OFAC regulations also direct that prohibited accounts of
and transactions with SDNs and Blocked Persons need to
be blocked or rejected. Generally, U.S. financial
institutions must block or freeze funds that are remitted by
or on behalf of a blocked individual or entity, are remitted
to or through a blocked entity, or are remitted in
connection with a transaction in which a blocked entity has
an interest. For example, a financial institution cannot
send a wire transfer to a blocked entity; once a payment
order has been received from a customer, those funds must
be placed in an account on the blocked entity’s behalf. The
interest rate must be a commercially reasonable rate (i.e., at
a rate currently offered to other depositors with similar
deposit size and terms). Customers cannot cancel or
amend payment orders on blocked funds after the U.S.
Bank Secrecy Act (12-04) 8.1-48 DSC Risk Management Manual of Examination Policies
Federal Deposit Insurance Corporation