State National Bank is a $250 million community bank. It makes a variety of consumer and commercial loans, regularly transmits funds via wire transfers for its customers, and issues commercial and stand-by letters of credit. Which of the following transactions can State National make without checking the OFAC SDN list and without incurring liability?
State National Bank must check the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list for all transactions to prevent dealing with sanctioned individuals or entities. Regardless of the transaction type, whether sending a wire transfer, selling a cashier's check, or cashing an on-us check, any failure to screen against the SDN list can result in liability for the bank. It is imperative for financial institutions to comply with OFAC regulations to avoid potential sanctions and penalties.
State National Bank, like any financial institution, should check the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list for all transactions, regardless of the nature of the transaction or the customer involved. OFAC regulations require financial institutions to screen transactions against the SDN list to prevent transactions involving sanctioned individuals or entities. Even though some transactions may seem routine or low risk, failure to screen them against the SDN list can expose the bank to potential liability if the transaction involves a prohibited party. Therefore, State National Bank should check the OFAC SDN list for all transactions to ensure compliance with OFAC regulations and mitigate the risk of facilitating transactions with sanctioned parties.