116. On February 14, 2008, OFAC issued guidance stating that the property and interests in property of an entity are blocked if the entity is owned, directly or indirectly, 50% or more by a person whose property and interests in property are blocked pursuant to an Executive Order or regulations administered by OFAC. We act as an intermediary bank in wire transfers between other banks. Does OFAC expect banks that are acting as financial intermediaries to research non-account parties that do not appear on the SDN List, but are involved with or referenced in transactions that are processed on behalf of correspondents?
A wire transfer in which an entity has an interest is blocked property if the entity is 50% or more owned by a person whose property and interests in property are blocked. This is true even in instances where such a transaction is passing through...
1) While OFAC does not expect manual diligence on the part of intermediary banks, OFAC considers even intermediary banks to have "reason to know" that it is processing a prohibited payment in situations where a bank’s interdiction software and/or post-alert diligence is not to OFAC’s standards.
See e.g. Deutsche Bank Trust Company Americas (2013); National Bank of Pakistan (2015); Banco do Brasil, S.A., New York (2015).
Another example might be where there are a substantial number of ignored red flags concerning a correspondent bank through which transactions are being processed, but as of 12/2020 there are no enforcement actions based on such facts.
2) Rare example of a "soft safe harbor" in which OFAC essentially says that intermediary banks frequently commit technical violations, but that it will not pursue enforcement of those...