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Compliance Is a declined transaction a blocked one
WASHINGTON (1/4/08)—What is a credit union to do when asked by a member to make a wire transfer to a country under U.S. sanctions? For instance, if a credit union declines a request to wire, say, $500 to a member’s aunt in Cuba, does it have to follow its action with a report to the Office of Foreign Assets Control (OFAC)? The Credit Union National Association’s (CUNA’s) Compliance Challenge advises credit unions that no OFAC reporting is triggered in situations like the one described. “There’s a big difference between responding to a person’s inquiry and blocking or rejecting a prohibited transaction under (OFAC) regulations,” says the Challenge. CUNA’s compliance experts point out that OFAC’s blocking provisions require financial institutions to block all "property" in which a target has an interest. The term "property" is very broadly defined, including present, future or contingent interests. However, in the case above, the credit union wouldn’t be holding blocked property until it received actual payment instructions from the member to send the funds. Had things gone that far, the funds would have to be blocked and reported to OFAC within 10 days. But for a inquiry, a credit union simply can say “no” to the request or direct the individual to OFAC to apply for a license to conduct the otherwise prohibited transaction. For more on this topic and additional Compliance Challenge questions, use the resource link below.
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