The BSA officer has just been notified by the chief operations officer that, due to a glitch in the bank's OFAC interdiction software, wires have been regularly transmitted to a bank on the SDN list. Based on the OFAC Enforcement Guidance, what should the BSA Officer do FIRST to attempt to mitigate any penalties?
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A. B. C. D.B
The Office of Foreign Assets Control (OFAC) is a U.S. government agency responsible for enforcing economic and trade sanctions against targeted foreign countries, entities, and individuals. Financial institutions in the United States are required to comply with OFAC regulations and screen transactions to ensure that they do not involve prohibited parties or activities.
In the given scenario, the BSA officer has just been notified of a glitch in the bank's OFAC interdiction software, which resulted in wires being transmitted to a bank on the SDN (Specially Designated Nationals) list. This is a serious compliance issue that could result in significant penalties and reputational harm for the bank.
According to the OFAC Enforcement Guidance, the first step that the BSA officer should take to attempt to mitigate any penalties is to stop and hold all wires to the bank on the SDN list. This is an important step because it demonstrates that the bank is taking immediate action to prevent further violations of OFAC regulations. Holding the wires will also provide the bank with an opportunity to review the transactions and determine whether any additional compliance issues may exist.
Once the wires have been stopped and held, the BSA officer should review the bank's OFAC wire policies and procedures to determine how the errors occurred. This review will help the bank identify any deficiencies in its compliance program and take corrective action to prevent similar issues from occurring in the future.
The BSA officer should also investigate the customer who sends these wires. This investigation is necessary to determine whether the customer is intentionally attempting to evade OFAC regulations or whether there are other issues that need to be addressed to ensure compliance.
Finally, the BSA officer should self-report the activity to OFAC. Self-reporting is a critical component of OFAC compliance and demonstrates the bank's commitment to compliance with OFAC regulations. By self-reporting, the bank may be able to reduce any potential penalties and demonstrate that it is taking proactive steps to address the compliance issue.
In summary, the correct answer to the question is B. Stop and hold all wires to the bank on the SDN list. However, the BSA officer should also take additional steps, such as reviewing the bank's policies and procedures, investigating the customer, and self-reporting the activity to OFAC, to mitigate any penalties and demonstrate the bank's commitment to compliance.