OFAC Action Indicates Banks Should Implement Continuous Monitoring of Sanction Lists

On July 21, 2022, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”)  issued a finding of violation against MidFirst Bank (“MidFirst” or “Bank”) for permitting two individuals who had been added to the OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN list”) to continue to conduct transactions for two weeks after their designation.

According to OFAC, MidFirst  had an agreement with a vendor who provided screening of the Bank’s customers against the SDN List. Pursuant to this agreement, the vendor was required to conduct daily screenings of new customers and existing customers who make changes to their accounts, such as their name or address. However, for existing customers that did not make any changes, the vendor only screened the customer list once a month. According to OFAC, this component of the agreement was misunderstood by MidFirst, who believed that daily screenings would be done against its entire customer base.

As a result of this misunderstanding, the two blocked individuals were able to successfully process 34 transactions, with “[n]inety-eight percent of the value of the post-designation transactions occurred within six hours of designation.” As such, MidFirst is now subject to violations of § 544.201 of the Weapons of Mass Destruction Proliferators Sanctions Regulations (“WMDPSR”).