If a Gateway discovers an OFAC hit in an IAT debit, what must it do?

If a Gateway discovers an OFAC hit in an IAT debit, what must it do?

• A. The Gateway must ignore the hit.
• B. Identify the Entry as suspect and forward it to the RDFI immediately.
• C. Delay processing until further notice.
• D. Delete the Entry from the record.

Answer: (B)

When a Gateway discovers an OFAC (Office of Foreign Assets Control) hit in an IAT (International ACH Transaction) debit, it is essential to treat that entry with caution due to the potential implications related to compliance with U.S. sanctions. OFAC regulations prohibit transactions with individuals or entities that are on the Specially Designated Nationals and Blocked Persons List (SDN list). Identifying the entry as suspect and forwarding it to the RDFI (Receiving Depository Financial Institution) is the appropriate action because it ensures that the entry is reviewed by the appropriate compliance personnel, who can take necessary steps in accordance with OFAC regulations. This step helps mitigate potential legal risks and financial penalties that could arise from processing transactions involving sanctioned entities. It is critical that all parties involved in the ACH process remain vigilant about compliance with regulatory requirements, particularly in international contexts where the risk of violating sanctions may be heightened. The other options do not fulfill the compliance requirements necessary when an OFAC hit is identified. Ignoring the hit, delaying processing without clear compliance direction, or deleting the entry could result in serious consequences, including legal repercussions, for the Gateway and any associated financial institutions. Thus, properly handling an OFAC hit by notifying the RDFI aligns with

When a Gateway discovers an OFAC (Office of Foreign Assets Control) hit in an IAT (International ACH Transaction) debit, it is essential to treat that entry with caution due to the potential implications related to compliance with U.S. sanctions. OFAC regulations prohibit transactions with individuals or entities that are on the Specially Designated Nationals and Blocked Persons List (SDN list).

Identifying the entry as suspect and forwarding it to the RDFI (Receiving Depository Financial Institution) is the appropriate action because it ensures that the entry is reviewed by the appropriate compliance personnel, who can take necessary steps in accordance with OFAC regulations. This step helps mitigate potential legal risks and financial penalties that could arise from processing transactions involving sanctioned entities. It is critical that all parties involved in the ACH process remain vigilant about compliance with regulatory requirements, particularly in international contexts where the risk of violating sanctions may be heightened.

The other options do not fulfill the compliance requirements necessary when an OFAC hit is identified. Ignoring the hit, delaying processing without clear compliance direction, or deleting the entry could result in serious consequences, including legal repercussions, for the Gateway and any associated financial institutions. Thus, properly handling an OFAC hit by notifying the RDFI aligns with