With Great Speed Comes Great Responsibility
October 14, 2022
OFAC Compliance Expectations for the Instant Payment Industry
The US Department of the Treasury's Office of Foreign Assets Control recently issued guidance reminding both financial institutions and entities who offer instant payment systems that despite the difficulty in reconciling instant payments with pre-transaction processing OFAC screening, risk-based compliance measures still should be taken. The new guidance underscores that OFAC is focussed on risks presented by the rise of instant payment systems that may be outpacing a financial institutions compliance systems and risk framework. Although OFAC falls short of requiring the use of Artificial Intelligence tools and "other innovative compliance solutions" to manage instant payment risk, the guidance notes that OFAC "is aware" that such tools are available to financial institutions, perhaps messaging that failure to consider such tools may fall short of expectations. Finally, OFAC "encourages" payment system developers to imbed tools in their products to facilitate a financial institution's ability to adequately manage sanctions risk.
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