OFAC Sanctions for Fintech and Payment Companies

How should fintech and payment companies manage OFAC risk?

Map who sends, receives, processes and settles payments, then design controls around the risks those flows create. Identify where the company can screen parties, how it investigates alerts and who decides whether a transaction must be blocked or rejected. For instant payments, assess which reviews can occur before funds become available.

OFAC Sanctions Compliance Guidance for Instant Payment Systems

Payment companies need to know what happens when a sanctions alert interrupts a transfer. Friling Law advises on sanctions screening, transaction reviews and communications with banking partners when a payment is flagged.

Design a process for sanctions alerts

• Map which entities initiate, process and receive the payment, what information each party can see and who can stop or release it.
• Define how staff resolve potential name matches and escalate questions about ownership, including OFAC’s 50 Percent Rule where applicable.
• Record the facts behind the decision and coordinate responsibilities for blocking, rejection and any required reporting with counsel and relevant payment partners.

Clarify the status of an interrupted payment

A bank’s internal review, a rejected payment and an OFAC block call for different follow-up. Obtain written details about the status and the party holding or returning the funds before deciding whether more documentation, a licensing review or another response is appropriate.

For ongoing controls, see OFAC compliance. For a sanctions-related payment interruption, see OFAC licensing and authorizations and our guide to blocked wire transfers. For separate Bank Secrecy Act and AML questions, see AML counsel for fintech and payment processors.

Official guidance

OFAC on blocking and rejecting transactions · OFAC on aggregate and indirect ownership

Diana Friling’s attorney profile · Explore the OFAC practice