OFAC Transaction Blocking
Question
Your institution has identified a transaction by an existing depositor that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?
Answers
Explanations
Click on the arrows to vote for the correct answer
A. B. C. D.D
When a financial institution identifies a transaction that is required to be blocked under OFAC requirements, the institution is required to take immediate action to prevent the transaction from being completed.
The correct answer to the question is A. Reject the transaction. The institution should instruct the branch to reject the transaction, so that it is not processed and the funds are not transferred. This action is necessary to ensure compliance with OFAC regulations and to prevent the bank from facilitating prohibited transactions.
The bank should then report the attempted transaction to OFAC as soon as possible, providing all necessary information related to the transaction, such as the account holder's name, transaction amount, and any other relevant details.
It is important to note that simply rejecting the transaction may not be sufficient to fully comply with OFAC requirements. The bank may need to take additional steps to investigate the transaction and determine if any further action is necessary. For example, if the transaction is suspicious, the bank may need to file a suspicious activity report (SAR) with the appropriate regulatory agency.
Regarding the other answer choices: B. Processing the transaction is not an appropriate action since it would result in the bank violating OFAC regulations. C. Closing the customer's account is not necessary at this point, although it may be necessary if the customer continues to attempt prohibited transactions. D. Placing the funds in an interest-bearing account is also not an appropriate action as it does not address the issue of compliance with OFAC regulations.
